Two investments involving a virtual mold apparatus for producing dental crowns qualify for different property classes. Investment A has a cost of $54,900, lasts 9 years with no salvage value, and costs $150,000 per year in operating expenses. It is in the 3-year property class. Investment B has a cost of $83,000.00, lasts 9 years with no salvage value, and costs $125,000 per year. Investment B, however, is in the 7-year property class. The company marginal tax rate is 25%, and MARR is an after-tax 10%. a. Based upon the use of MACRS-GDS depreciation, compare the AW of each alternative. AWA = $ AWB = $ Which should be selected? (Investment A; Investment B) b. What must be Investment B's cost of operating expenses for these two investments to be equivalent? $ Round your answer to 2 decimal places. The tolerance is ± 10. Click here to access the TVM Factor Table Calculator Click here to access the MACRS-GDS table.
Two investments involving a virtual mold apparatus for producing dental crowns qualify for different property classes. Investment A has a cost of $54,900, lasts 9 years with no salvage value, and costs $150,000 per year in operating expenses. It is in the 3-year property class. Investment B has a cost of $83,000.00, lasts 9 years with no salvage value, and costs $125,000 per year. Investment B, however, is in the 7-year property class. The company marginal tax rate is 25%, and MARR is an after-tax 10%. a. Based upon the use of MACRS-GDS depreciation, compare the AW of each alternative. AWA = $ AWB = $ Which should be selected? (Investment A; Investment B) b. What must be Investment B's cost of operating expenses for these two investments to be equivalent? $ Round your answer to 2 decimal places. The tolerance is ± 10. Click here to access the TVM Factor Table Calculator Click here to access the MACRS-GDS table.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Solve all this question......you will not solve all questions then I will give you down?? upvote..
![Two investments involving a virtual mold apparatus for producing dental crowns qualify for different property classes. Investment A
has a cost of $54,900, lasts 9 years with no salvage value, and costs $150,000 per year in operating expenses. It is in the 3-year
property class. Investment B has a cost of $83,000.00, lasts 9 years with no salvage value, and costs $125,000 per year. Investment B,
however, is in the 7-year property class. The company marginal tax rate is 25%, and MARR is an after-tax 10%.
a. Based upon the use of MACRS-GDS depreciation, compare the AW of each alternative.
AWA = $
AWB = $
Which should be selected? (Investment A; Investment B)
b. What must be Investment B's cost of operating expenses for these two investments to be equivalent? $
Round your answer to 2 decimal places. The tolerance is ± 10.
Click here to access the TVM Factor Table Calculator
Click here to access the MACRS-GDS table.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F71508d4f-7186-4361-aa90-536b1b9115cf%2F8295896a-e5bd-44b6-a0b5-5f89f4c7145b%2Fwaqmwob_processed.png&w=3840&q=75)
Transcribed Image Text:Two investments involving a virtual mold apparatus for producing dental crowns qualify for different property classes. Investment A
has a cost of $54,900, lasts 9 years with no salvage value, and costs $150,000 per year in operating expenses. It is in the 3-year
property class. Investment B has a cost of $83,000.00, lasts 9 years with no salvage value, and costs $125,000 per year. Investment B,
however, is in the 7-year property class. The company marginal tax rate is 25%, and MARR is an after-tax 10%.
a. Based upon the use of MACRS-GDS depreciation, compare the AW of each alternative.
AWA = $
AWB = $
Which should be selected? (Investment A; Investment B)
b. What must be Investment B's cost of operating expenses for these two investments to be equivalent? $
Round your answer to 2 decimal places. The tolerance is ± 10.
Click here to access the TVM Factor Table Calculator
Click here to access the MACRS-GDS table.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 5 steps with 4 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![Principles of Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781305585126/9781305585126_smallCoverImage.gif)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Managerial Economics: A Problem Solving Approach](https://www.bartleby.com/isbn_cover_images/9781337106665/9781337106665_smallCoverImage.gif)
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
![Managerial Economics & Business Strategy (Mcgraw-…](https://www.bartleby.com/isbn_cover_images/9781259290619/9781259290619_smallCoverImage.gif)
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education