1 A firm must decide between two silicon layer chip designs from Intel. Their effective income tax rate is 24%, and MACRSdepreciation is used. If the desired after-tax return on investment is 12% per year, which design should be chosen?Design ADesign B$1,140,000$960,000$1,810,000$1,110,000Capital investmentMV at end of useful lifeAnnual revenues less$250,000$370,000expenses5 years7 years5 years6 yearsMACRS property classUseful lifeClick the icon to view the GDS Recovery Rates (r,) for the 5-year property class......Calculate the AW value for the Design A.AWA(12%) = $|(Round to the nearest dollar.)Calculate the AW value for the Design B.AWR(12%) = S(Round to the nearest dollar.)Based on the AW values,should be chosen.

Depreciation Schedule for the designs under MACRS rates For Design A Year capital investment…

A firm must decide between two silicon layer chip designs from Intel. Their effective income tax rate is 24%, and MACR depreciation is used. If the desired after-tax return on investment is 12% per year, which design should be chosen? Design A $1,140,000 $960,000 Design B $1,810,000 $1,110,000 Capital investment MV at end of useful life Annual revenues less $250,000 $370,000 expenses MACRS property class 5 years 7 years 5 years Useful life 6 years Click the icon to view the GDS Recovery Rates (r,) for the 5-year property class. ..... Calculate the AW value for the Design A. AWA(12%) = S (Round to the nearest dollar.) Calculate the AW value for the Design B. AWg(12%) = S (Round to the nearest dollar.) Based on the AW values, should be chosen.

A firm must decide between two silicon layer chip designs from Intel. Their effective income tax rate is 24%, and MACR depreciation is used. If the desired after-tax return on investment is 12% per year, which design should be chosen? Design A $1,140,000 $960,000 Design B $1,810,000 $1,110,000 Capital investment MV at end of useful life Annual revenues less $250,000 $370,000 expenses MACRS property class 5 years 7 years 5 years Useful life 6 years Click the icon to view the GDS Recovery Rates (r,) for the 5-year property class. ..... Calculate the AW value for the Design A. AWA(12%) = S (Round to the nearest dollar.) Calculate the AW value for the Design B. AWg(12%) = S (Round to the nearest dollar.) Based on the AW values, should be chosen.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter13: Capital Budgeting: Estimating Cash Flows And Analyzing Risk

Section: Chapter Questions

Problem 1P: Talbot Industries is considering launching a new product. The new manufacturing equipment will cost...

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