Bedford Company Ltd. operates a commercial fleet of fishing vessels off the south shore of...
60.1K
Verified Solution
Link Copied!
Question
Accounting
Bedford Company Ltd. operates a commercial fleet of fishing vessels off the south shore of Nova Scotia. Bedford is considering a proposal to do some of its routine maintenance work itself rather than contracting out all of its maintenance. The proposal will require Bedford to buy a $300,000 machine that will be depreciated over its three-year useful life on a straightline basis to a market salvage value of $50,000. Bedford will also need to make an initial investment in additional inventory of $75,000. The proposal is expected to result in pre-tax savings to the company of $200,000 per year. Bedfords tax rate is 20%, its cost of capital is 16% and the applicable CCA rate on the machine is 25%. Based on this information, what is the NPV of the asset that would indicate that Bedford should accept the proposal? a) $46,531 b) $94,580 c) $102,392 d) $184,416
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!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.