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You are buying a new truck in order to grow your local moving service. The new truck costs $37,000. You will need to spend another $6,000 on hitches, ramps, and other special equipment for this use. You will use this truck for 4 years and then you plan that the salvage value will be $8,000.

The new truck should increase revenue by 40% over last year's $85,000 revenue. As a result of the truck purchase, operating expenses will increase by $11,000. The depreciation expense will increase by $2500. Your marginal tax rate is 35%.

In year 4, you sell the truck for $12,000. How much will you owe in taxes? (answers provided in $)

a) 7,800

b) 1,134

c) 1,400

d) $4,200

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92726219

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