The ABC Company uses the after-tax MARR of 10% per year, and effective tax rate (T.) of 50%. A newmachine has the following estimates:New MachineFirst cost ($)Annual operating cost ($/year)-15,000-3,000Salvage value ($)Life (years)3,00010The machine is retained in use for 10 years, and then sold for the estimated salvage value.a. Complete the table below to find the cash flow after-tax (CFAT) in each year using the straight-line(SL) depreciation method over the 10-year life.b. Estimate the after-tax net present worth (NPW) using a MARR of 10% per year.Depreciation Taxable($)YearGrossInitialCFBTТахesCFAT ($)Expenses($)IncomeInvestment or($)Income($)($)Salvage ($)-15,000($)-0.--1 to 10-3,000-1500--3,000-10-

Depreciation as per SLM = (Initial cost - Salvage Value)/life Present Value of CFAT i.e. cash flows…

The ABC Company uses the after-tax MARR of 10% per year, and effective tax ra machine has the following estimates: New Machine First cost ($) -15,000 Annual operating cost ($/year) Salvage value ($) Life (years) -3,000 3,000 10 The machine is retained in use for 10 years, and then sold for the estimated sa' a. Complete the table below to find the cash flow after-tax (CFAT) in each (SI) depreociation method over the 10-vear life.

The ABC Company uses the after-tax MARR of 10% per year, and effective tax ra machine has the following estimates: New Machine First cost ($) -15,000 Annual operating cost ($/year) Salvage value ($) Life (years) -3,000 3,000 10 The machine is retained in use for 10 years, and then sold for the estimated sa' a. Complete the table below to find the cash flow after-tax (CFAT) in each (SI) depreociation method over the 10-vear life.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 18E

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