Harper Corporation has the following information about the purchase of a new piece of equipment: Cash revenues less cash expenses $50,000 per year Cost of equipment $130,000 Salvage value at the end of the 8th year $22,000 Increase in working capital requirements $35,000 Tax rate 25 percent Life
Harper Corporation has the following information about the purchase of a new piece of equipment:
Cash revenues less cash expenses $50,000 per year
Cost of equipment $130,000
Salvage value at the end of the 8th year $22,000
Increase in working capital requirements $35,000
Tax rate 25 percent
Life 8 years
The cost of capital is 13 percent.
Required:
- Calculate the following assuming straight-line
depreciation:
- Calculate the after-tax payback period.
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