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Jon lawn service is buying several lawn mowers for $140,000 and sell its old lawn motor that is depreciated at $24,000.
1.Jon lawn service is buying several lawn mowers for $140,000 and sell its old lawn motor that is depreciated at $24,000. The new lawn movers have a 10-year life cycle and will save $32,000 a year in expenses. The opportunity cost of capital is 8%, and my business tax rate is 40%. What is the equivalent annual savings from the purchase if lawn mowers use straight-line depreciation? Assume the new lawn mowers will have no salvage value. What is the Equivalent annual savings?
2.years for $11,000. The mower will have no effect on revenues but will save John $22,000 in energy expenses per year. The tax rate is 40%. Use the
