Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. you run a plumbing company. you are experiencing a

You run a plumbing company. You are experiencing a growth in your business, and find you...

80.2K

Verified Solution

Question

Accounting

You run a plumbing company. You are experiencing a growth inyour business, and find you don't have enough trucks and plumbersto meet the demand. You are considering buying a new truck and thenhiring an additional plumber to handle some of the work you havehad to turn away.   Based on the assumptions below,prepare a Capital Budgeting Analysis using the template provided.Assume you will sell the truck at the end of year 3.

Cost of the Truck$35,000.00
TruckModifications$4,000.00
Sales Taxon Truck$2,750.00
Depreciation MethodStraight Line
UsefulLife of Truck in Years5
Revenues$100,000.00
PlumberWages$55,000.00
Gas forTruck$5,000.00
Insurancefor Truck$750.00
Maintenance for Truck$1,200.00
PlumbingSupplies$5,000.00
SalePrice of Truck$20,000.00
CompanyTax Rate35.00%
NPVDiscount Rate7.00%

What is the Capital Investment / Depreciable Basis?

What is the Book Value at the end of Year 2?

What is the Operating Cash Flow for Year 1?

What is the Salvage Value?

What is the Net Present Value (NPV)?

Answer & Explanation Solved by verified expert
4.0 Ratings (617 Votes)
Capital InvestmentDepreciable basis A 41750 Book Value at the end of year 2 F 25050 Operating cash flows at year 1 I 24700 Salvage value of truck at year 3 G 17269 NPV HA 17652 Workings Initial Investment Cost of truck 35000 Truck modifications 4000 Sales tax on truck 2750 Capital InvestmentDepreciable basis    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Steam distillation lab? One can prepare homemade lavender perfume by steam distillation,one of the main components in the...

Chemistry
Q

explain how epinephrine and norepinephrine affect plasma glucagon and why is this important during exercise?

Medical Sciences
Q

Write the balanced chemical equation for the dissolving of copper carbonate in water, and write its...

Chemistry
Q

One topic covered in this chapter is: "methods of paying wages and salaries." Using the knowledge...

Accounting
Q

What is an amplicon O Target ds DNA none of these ss DNA Target ss...

Biology
Q

1 330 m s 2 350 m s 3 300 m s 4 360 m...

Physics
Q

3GM r 3 D If gravitational field intensity is E at distance R 2 outside...

Physics
Q

What is the slope of the line y 3 4x 2 5 O a insufficient...

Basic Math
Q

A loan of R12000 was secured at 20% p.a. effective. It was agreed to repay...

Algebra
Q

8 Write an equivalent expression over the given domain x 6 for all x except...

Algebra
Q

At year-end, December 31, 2017, Corolla Sales showed unadjusted balances of: $386,000 in Accounts Receivable;...

Accounting
Q

102(00 Cre

Accounting