Order the answer to: The Ajax Corporation purchased a railroad

Assignment Help business-economics Order the answer to: The Ajax Corporation purchased a railroad

business-economics

Order the answer to: The Ajax Corporation purchased a railroad

Question The Ajax Corporation purchased a railroad tank car 8 years ago for $60,000. It is being depreciated by SOYD , assuming a 10-year depreciable life and a $7000 . The tank car needs to be reconditioned now at a cost of $35,000. If this is done, it is estimated the equipment will last for 1° more years and have a $10,000 at the end of the 1° years. On the other hand, the existing tank car could be sold now for $10,000 and a new tank car purchased for $85,000. The new tank car would be depreciated by MACRS . Its estimated actual would be $15,000. In addition, the new tank car would save $7000 per year in maintenance costs, compared to the reconditioned tank car. Based on a 15% before-tax rate of return, determine whether the existing tank car should be reconditioned or a new one purchased. (Note: The problem statement provides more data than are needed, which is typical of real situations.)
Subject business-economics
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