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Liberty Airways is considering an investment of $770,000 in ticket purchasing kiosks at selected airports....

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Accounting

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Liberty Airways is considering an investment of $770,000 in ticket purchasing kiosks at selected airports. The koosks (hardware and software) have an expected life of four years. Extra ticket sales are expected to be 57,000 per year at a discount price of $36 per ficket. Fixed costs, excluding depreciation of the equipment, are $420,000 per year, and variable costs are $27 per ticket. The kiosks will be depreciated over four years, using the SL method with a zero salvage value. The onetime commitment of working capital is expected to be 1/12 of annual sales dollars. The after-tax MARR is 20% per year, and the company pays income tax at the rate of 24%. What's the after-tax PW of this proposed investment? Should the investment be made? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 20% per year. The after-tax. PW of this proposed investment is S thousand. (Round to the nearest whole number.) More Info

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