In conducting an EVA analysis for year two for a newly introduced product line, Bethune, Inc., which manufactures pre-assembled blower packages and other water treatment components, determined the EVA to be $28,000. Bethune’s CEO knew that the gross income was $700,000, but he asked you to find out how much expense was associated with the new product line for year 2. The company uses an after-tax interest rate of 14% and a Te of 35%. The initial investment capital required for the new product was $550,000 and all equipment is 3-year MACRS depreciated.

In conducting an EVA analysis for year two for a newly introduced product line, Bethune, Inc., which manufactures pre-assembled blower packages and other water treatment components, determined the EVA to be $28,000. Bethune’s CEO knew that the gross income was $700,000, but he asked you to find out how much expense was associated with the new product line for year 2. The company uses an after-tax interest rate of 14% and a Te of 35%. The initial investment capital required for the new product was $550,000 and all equipment is 3-year MACRS depreciated.

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter16: Accounting Periods And Methods

Section: Chapter Questions

Problem 17DQ

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