+1-415-315-9853

info@mywordsolution.com

## Accounting

 Accounting Basics Cost Accounting Financial Accounting Managerial Accounting Auditing Taxation

Task1. Scenario analysis Your firm, Agrico Products, is considering a tractor which would have a cost of \$36,000, would raise pre-tax operating cash flows before taking account of depreciation by \$12,000 per year, and would be depreciated on the straight-line basis to zero over five years at the rate of \$7,200 per year, starting the first year. (Thus, annual cash flows would be \$12,000 before taxes plus the tax savings which result from \$7,200 of depreciation.) The managers are having a heated debate about whether the tractor would actually last five years. The controller persists that she knows of tractors which have lasted only four years. The treasurer agrees with the controller, but he argues that most tractors actually do give five years of service. The service manager then states that some last for as long as eight years. Given this discussion, the CFO asks you to make a scenario analysis to find out the significance of the tractor's life on the NPV. Use a 40% marginal federal-plus-state tax rate, a zero salvage value, and a 8% WACC. Supposing each of the indicated lives has the same probability of occurring (probability = 1/3), what is the tractor's expected NPV? (Hint: Use the 5-year straight-line depreciation for all analyses and ignore the MACRS half-year convention for this problem.)

A. Tractor's NPV when actual life is 5 years?

B. Tractor's NPV when actual life is 4 years?

C. Tractor's NPV when actual life is 8 years?

D. Tractor's expected NPV?

Financial Accounting, Accounting

• Category:- Financial Accounting
• Reference No.:- M93951

Have any Question?

## Related Questions in Financial Accounting

### Assignmenti a comparing three depreciation methods obj

Assignment I. A Comparing three depreciation methods ObJ. 2 Waldum Company purchased packaging equipment on January 5, 2012, for \$135,000. The equipment was expected to have a useful life of three years, or 18,000 operat ...

### Accounting for contributions vary by usethe city of

Accounting for Contributions Vary by Use The City of Jamestown has agreed to acquire a new city maintenance building under a capital lease agreement. At the inception of the lease, a payment of \$100,000 is to be made; ni ...

### Financial accounting multiple choice1 preparing a bank

Financial Accounting Multiple Choice 1) Preparing a bank reconciliation enables a company to ________. A) locate any errors, whether made by the bank or by the company B) make adjustments for transactions that have alrea ...

### Assignmentnarrative and instructionsrockford corporation is

Assignment Narrative and Instructions Rockford Corporation is a wholesale plumbing supply distributor. The corporation was organized in 1981, under the laws of the State of Illinois, with an authorized capitalization of ...

### Assignmentplease complete the following exercises below in

Assignment Please complete the following exercises below in either Excel or a word document (but must be single document). You must show your work where appropriate (leaving the calculations within Excel cells is accepta ...

### 1 at what position levels of employees is ethics an

1. At what position levels of employees is ethics an important part of decision making in a company? 2. The Foreign Corrupt Practices Act outlaws what type of business practices and how? 3. Conduct a Porter’s 5 forces an ...

### Assignmentglorious garden lawn service1 prepare the entries

Assignment Glorious Garden Lawn Service 1. Prepare the entries using the list of transactions. Put them in the general journal. 2. Post the journal entries from the general journal to the general ledger. 3. Prepare a tri ...

### Accounting assignmentproject datanoble company is a small

Accounting Assignment Project Data Noble Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own; rather, it relies completely on independent sales agents to ...

### Gaappartnershipsethics1500 words - apa formatyou are an

GAAP/Partnerships/Ethics (1,500 Words - APA Format) You are an accounting student taking a class in accounting. Your professor has given you an assignment for the weekend. He wants you to look at each ethical scenario li ...

### Asignmentthe regal cycle company manufactures three types

Asignment The Regal Cycle Company manufactures three types of bicycles-a dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter follow:   Total Dirt Bikes Mountain Bikes Racing Bik ...

• 13,132 Experts

## Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

### WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

### Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

### Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

### Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

### Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro