USA Depreciation Problem
- Thread starter yamil1585
- Start date
Per my quick calculations my answer is 14.4%
The old equipment generates a gross profit of $35,150. The new equipment will generate $59,150 in income, and $1,200 in repairs costs and $12,000 in depreciation which means that in order to match the same gross profit of $35,150 the most you can spend on interest is $10,800. The loan principal is $75,000 and $10,800 divided by $75,000 = .144
The old equipment generates a gross profit of $35,150. The new equipment will generate $59,150 in income, and $1,200 in repairs costs and $12,000 in depreciation which means that in order to match the same gross profit of $35,150 the most you can spend on interest is $10,800. The loan principal is $75,000 and $10,800 divided by $75,000 = .144
Guaooo thks.... that’s the answer. Appreciate