In order to expand its business, Auto Parts Distributing, Inc., is considering the purchase of 10 pickup trucks at a total cost of $150,000. The company expects to keep these trucks for four years, then sell them. The company expects these trucks to generate a pretax net cash flow of $75,000 in year 1, $70,000 in year 2, $65,000 in year 3, $60,000 in year 4, and to sell after four years for a total price of $30,000 fully taxable. The company's marginal tax rate is 36% and its cost of capital is 9%.© BrainMass Inc. brainmass.com June 3, 2020, 10:56 pm ad1c9bdddf
The solution examines the cash flow for Auto Parts Distribution, Inc.