Duddy Kravitz owns the Saint Viateur Bagel store. His world famous bagels are hand rolled, boiled in honey-water and baked in a wood-burning oven. The store sells 5,000 bagels per day and is open 365 days of the year. The bagels are so popular that, on weekends, the customer line-up runs half-way down the block. Uncle Benjy thinks that the wood-fired oven should be replaced by a modern gas oven, which would reduce costs by $0.02 per bagel. A new oven would cost $105,000. Duddy is considering Uncle Benjy's idea, but he only plans to be in business for another two years. The bagels are sold for $0.75 each. The cost of producing each bagel with the wood-burning oven is $0.50 which includes labour and raw materials. The current oven was purchased thirty years ago for $20,000. It could be sold today for $5,000 and will be worth $3,000 in two years. A new oven costs $105,000 today and could be sold for $55,000 in two years. Duddy's cost of capital is 9%. Assume that investment cash flows occur immediately, and that sales and production costs occur at the end of the year. Assume that both ovens are classified as 10-year property and depreciated using the MACRS system. The tax rate is 35%. What are the terminal year cash flows?
MACRS Depreciation Rates
| Year | 5-Year | 7-Year | 10-Year |
| 1 | 20.00% | 14.29% | 10.00% |
| 2 | 32.00% | 24.49% | 18.00% |
| 3 | 19.20% | 17.49% | 14.40% |
| 4 | 11.52% | 12.49% | 11.52% |
| 5 | 11.52% | 8.93% | 9.22% |
◦ $30,340
◦ $36,500
◦ $62,260
◦ $90,600
◦ $94,500
Anatomy of the Wrist and Hand
Phylogenetic tree based on the distribution of 120 alleles in 42 populations from around the world,
A cartoon of “King Andrew the First” shows Jackson standing atop the U.S. Constitution—a scepter in
How The World Is Urbanizing
Apply long effleurage stroke to entire arm, from hand to shoulder. Brush off from shoulder to hand. ...
(A) Slide the hand up the shoulder and neck to GB-20 and Bl-10. (B) Fingertip press or circular ...