A Caribbean cruise line has purchased a new cruise ship for $35 million and expects to realize a net revenue of $210,000 each year for the next 10 years. The estimated salvage value of the ship at the end of its useful life of 10 years is $134,000. Assume an effective federal tax rate of 40%, a state income tax rate of 7% per year, and an after- tax
inflation- free MARR of 8% per year. Calculate the actual dollar present worth of ATCF if straight- line depreciation is used and the average rate of inflation is 4% per year.

Question

Quizplus · Accepted Answer

The Answer of A Caribbean cruise line has purchased a new cruise ship for $35 million and expects to realize a net revenue of $210,000 each year for the next 10 years. The estimated salvage value of the ship at the end of its useful life of 10 years is $134,000. Assume an effective federal tax rate of 40%, a state income tax rate of 7% per year, and an after- tax
inflation- free MARR of 8% per year. Calculate the actual dollar present worth of ATCF if straight- line depreciation is used and the average rate of inflation is 4% per year.

A Caribbean Cruise Line Has Purchased a New Cruise Ship