compute and discuss the final profit or loss -the sum- for the 5 years (useful...
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compute and discuss the final profit or loss -the sum- for the 5 years (useful life), if the company runs this investment.
The "Transporting AMD" company is planning to set up a freight hub, as a new investment The Cost (C) of the investment is 9,500 (it is paid for starting this investment). The investment is expected to have 5 years useful life. Depreciation (D) is expensed on a straight-line basis (meaning the same amount is expensed in each period over the asset's useful life). The salvage value is 1,500 (resale value after depreciation is complete at the end of its useful life of the investment). The Total Revenues (TR) from services per year is 8,250 (cash inflows). The Fixed Cost (FC) comprises several selling, general and administrative expenses (SG&A) without depreciation and are paid for the investment's operation per year 1,000 (cash outflows). The Variable Cost (VC) is the direct cost of services and paid for the investment's operation per year at the level of 3,650 (cash outflows), Acceptable payback period for the investment is 3 years, Last, the tax rate for the company is 30%
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