A firm is considering purchasing a machine that costs $76,000. It will be used for six years, and the salvage value at that time is expected to be zero. The machine will save $42,000 per year in labor, but it will incur $16,000 in operating and maintenance costs each year. The machine will be depreciated according to five-year MACRS. The firm's tax rate is 35%, and its after-tax MARR is 17%. Should the machine be purchased? Click the icon to view the MACRS depreciation schedules. Click the icon to view the interest factors for discrete compounding when / = 17% per year. The present worth of the project is $. (Round to the nearest dollar.)
A firm is considering purchasing a machine that costs $76,000. It will be used for six years, and the salvage value at that time is expected to be zero. The machine will save $42,000 per year in labor, but it will incur $16,000 in operating and maintenance costs each year. The machine will be depreciated according to five-year MACRS. The firm's tax rate is 35%, and its after-tax MARR is 17%. Should the machine be purchased? Click the icon to view the MACRS depreciation schedules. Click the icon to view the interest factors for discrete compounding when / = 17% per year. The present worth of the project is $. (Round to the nearest dollar.)
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter17: Long-term Investment Analysis
Section: Chapter Questions
Problem 2E
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