Project Section 4: You are considering buying an industrial equipment whose price is given by 285000 The equipment is expected to earn an annual revenue of $125,000. The equipment will be depreciated under MACRS as a five-year recovery property. The equipment will be used for seven years, at the end of which time, you can sell it for $50,000. Your company's marginal tax rate is 35% over the project period. Perform the following: a) Determine the net after - tax cash flows for each period over the project life. b) Net present worth assuming company MARR = 15%. c) Annual equivalent cash flow company MARR 15%. d) IRR of the project. =
Project Section 4: You are considering buying an industrial equipment whose price is given by 285000 The equipment is expected to earn an annual revenue of $125,000. The equipment will be depreciated under MACRS as a five-year recovery property. The equipment will be used for seven years, at the end of which time, you can sell it for $50,000. Your company's marginal tax rate is 35% over the project period. Perform the following: a) Determine the net after - tax cash flows for each period over the project life. b) Net present worth assuming company MARR = 15%. c) Annual equivalent cash flow company MARR 15%. d) IRR of the project. =
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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Question
![Project Section 4: You are considering buying an industrial equipment whose price is given by 285000 The equipment is
expected to earn an annual revenue of $125,000. The equipment will be depreciated under MACRS as a five-year
recovery property. The equipment will be used for seven years, at the end of which time, you can sell it for $50,000. Your
company's marginal tax rate is 35% over the project period. Perform the following: a) Determine the net after - tax cash
flows for each period over the project life. b) Net present worth assuming company MARR = 15%. c) Annual
equivalent cash flow company MARR 15%. d) IRR of the project.
=](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F504f87fe-c06f-4c41-be12-3f0038db4216%2F456c5024-6e99-4923-ac89-bbab2990e7ac%2F5f1o6dc_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Project Section 4: You are considering buying an industrial equipment whose price is given by 285000 The equipment is
expected to earn an annual revenue of $125,000. The equipment will be depreciated under MACRS as a five-year
recovery property. The equipment will be used for seven years, at the end of which time, you can sell it for $50,000. Your
company's marginal tax rate is 35% over the project period. Perform the following: a) Determine the net after - tax cash
flows for each period over the project life. b) Net present worth assuming company MARR = 15%. c) Annual
equivalent cash flow company MARR 15%. d) IRR of the project.
=
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