{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Hot Landings Homework

Hot Landings Homework - Sales Insurance&MinorFixedCosts...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Year 1 Sales  $450,000  Variable Operating Costs  $270,000  Insurance & Minor Fixed Costs  $26,000  Net Working Capital (?)  $4,000   $4,500  New turboprop aircraft would cost $1,500,000 Variable Operating Costs incl. wages = 60% of sales revenue each year One time consultant cost = $9500 (Sunk cost) King Air Upgrades Info: Upgrades = $135,000 7 year MACRS schedule depreciation (shown in notes) Financed with a 4 year bank loan for 80% of purchase price ($108k)  Annual pmts at the end of each of the 4 years @ 12% compounded annually  Resale Value at the end of 5 Years = $27,000 King Air: $0 Current Book Value $400,000 Current After-tax Resale Value (should this cost be considered as an opportunity cos $300,000 Pre-tax Resale Value in 5 Years Marginal Tax Rate = 38% Discount Rate = 13% Should Hot Landings accept the new contract? Present a handwritten spreadsheet of the cash flows.
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern