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After graduating with a marketing degree, you follow the path of many before you and...

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Finance

After graduating with a marketing degree, you follow the path of many before you and start your career as a barista. Congrats! After one week of you quickly quit and decide to start your own business plowing snow. You will need to buy a used Ford F30 truck at a local Ford dealer for $47,000. The truck should last 10 years and will be depreciated to $5,000. Going rates for snow plowing residential driveways in Niles, IL is $30 per snowfall. Snow is expected to fall in the area 20 times per winter. You estimate you can plow the following number of driveways: year 1=250; year 2= 275; year 3=275; year 4= 325; year 5; 350. Your cost of goods as a percent revenue is estimated at 59%. Your selling, general, and administrative expenses as a percent of revenues estimated is 33%. The corporate tax rate applicable to your company is 25%. Assume an opportunity cost of capital of 10%.

What is the amount of Depreciation Expense in year 4 (rounded to the nearest dollar)?

a) $5,000

b) $4,200

c) $47,000

d) None of the above

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