The cost of a replacement packaging machine if $95,000. The machine is anticipate to reduce the packaging costs by $20 per parcel. The company expects to send out 25,000 parcels per year. The salvage values of the machine is anticipated to be $23,000 at the end of 10 years. What is the present worth of the machine if the after-tax MARR is 10%, the CCA rate is 20%, and the tax rate is 40%? [Enter your response in $. Round to the nearest full dollar]
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- A new municipal refuse collection vehicle can be purchased for $84,000. Itsexpected useful life is six years, at which time the market value and book value will be zero. Before-tax cash flow (BTCF) will be +$18,000 per year over the six-year life of the vehicle. Solve, a. Use straight-line depreciation, an effective income tax rate of 40% and an after-tax MARR of 12% to determine the present worth of the investment. b. What is the after-tax internal rate of return? c. Is this vehicle a sound investment? Explain your answer.A firm can purchase a centrifugal separator (5-year MACRS property) for $22,000. The estimated salvage value is $4,000 after a useful life of six years. Operating and maintenance (O&M) costs for the first year are expected to be $2,200. These O&M costs are projected to increase by $1,000 per year each year thereafter. The income tax rate is 24% and the MARR is 11% after taxes. What must the uniform annual benefits be for the purchase of the centrifugal separator to be economical on an after-tax basis?A subsidiary of AEP places in service electric generating and transmissionequipment at a cost of $3,000,000. It is expected to last 30 years with a salvage value of $250,000. The equipment will increase net income by $500,000 in the first year, increasing by 2.4% each year thereafter. The subsidiary’s tax rate is 25% and the after-tax MARR is 9%. There is some concern that the need for this equipment will last only 10 years and will need to be sold off for $550,000 at that time. Develop tables using aspreadsheet to determine the ATCF for each year and the after-tax PW, AW, IRR, and ERR after only 10 years to see if the venture would be worthwhile economically. Solve, a. Use straight-line depreciation (no half-year convention). b. Use MACRS-GDS and state the appropriate property class. c. Use double declining balance depreciation (no half-year convention, no switching).
- A car industry invested $20,000 in cars with a 3-year useful life. The cars will have no salvage value, as the cost to remove it will equal its scrap value. The uniform annual benefits from the cars are $12,000. For a combined 25% income tax rate, and 100% bonus depreciation, compute the after-tax net present worth (NPW) using MARR if 10%.Peachtree Construction Company, a highway contractor, is considering the purchase of a new trench excavator that costs 300000 and can dig a 3-foot-wide trench at the rate of 16 feet per hour. The contractor gets paid according to the usage of the equipment, 100 per hour. The expected average annual usage is 500 hours, and maintenance and operating costs will be 10 per hour. The contractor will depreciate the equipment by using a five-year MACRS, units-of-production method. At the end of five years, the excavator will be sold for 100000. Assuming the contractor’s marginal tax rate is 25% per year, determine the annual after-tax cash flow. In excel.BigCo is considering leasing the new equipment that it requires, for $153,000 a year, payable in advance. The cost of the equipment is $900,000, has a CCA rate of 30% and will last for 6 years. The expected scrap value is $162,000. Assume that the first CCA tax deduction would be taken at the end of the first year. BigCo has lots of other equipment in this asset pool. The tax rate is 30% and the cost of debt is 9%. a. Should BigCo lease or buy the equipment? Big Co should (Click to select) lease buy the equipment. b. What is the maximum lease payment that would make BigCo indifferent between leasing or buying? (Round your answer to 4 decimal places.) The maximum lease payment $
- A corporate expects to receive $36,144 each year for 15 years if a particular project is undertaken. There will be an initial investment of $100,705. The expenses associated with the project are expected to be $7,740 per year. Assume straight-line depreciation, a 15-year useful life, and no salvage value. Use a combined state and federal 48% marginal tax rate, MARR of 8%, determine the project's after-tax net present worth.Anew forklift truck will require an investment of $30,000 and is expectedto have end-of-year market values and annual expenses as shown in the Table below.If MARR (before tax) is 10% per year, Önd the Economic Service Life of the truck.Market Value Annual ExpensesEnd of year at end of year during year1 $22,500 $3,0002 $16,875 $4,5003 $12,750 $7,0004 $9,750 $10,0005 $7,125 $13,000 please dont use excellGreen Management Company is consideringthe acquisition of a new eighteen-wheeler.• The truck’s base price is $80,000, and it will costanother $20,000 to modify it for special use by thecompany.• This truck falls into the MACRS five-year class. Itwill be sold after three years for $30,000.• The truck purchase will have no effect on revenues, but it is expected to save the firm $45,000per year in before-tax operating costs, mainly inleasing expenses.• The firm’s marginal tax rate (federal plus state) is40%, and its MARR is 15%.(a) Is this project acceptable, based on the mostlikely estimates given in the problem?(b) If the truck’s base price is $95,000, what wouldbe the required savings in leasing so that the project would remain profitable?
- A company is evaluating the addition of equipment to its present operations. They need to purchase equipment for $160,000. The five year MACRS GDS Recovery Method is appropriate for the investment and the total tax rate (federal plus state) is 40%. Gross revenue is expected to be $30,000/year while maintenance costs are expected to be $5,000/year. It is expected that the operation will be shut down at the end of the fourth year with a salvage value of $20,000. a- Draw a BTCFD b- Prepare a table showing your development of the ATCF's. c- If the company's aftertax MARRis 12%/year, is this a profitable investment?BC Junction purchased some embroidering equipment for their Denver facility 3 years ago for $15,000. This equipment qualified as MACRS 5-year property. Maintenance costs are estimated to be $1000 this next year and will increase by $1000 per year thereafter. The market (salvage) value for the equipment is $10,000 at the end of this year and declines by $1000 per year in the future. If BC Junction has an after-tax MARR of 30%, a marginal tax rate of 28% on ordinary income, depreciation recapture, and losses, what aftertax life of this previously purchased equipment has the lowest EUAC?A manufacturer purchased and installed a shrink-wrap machine 4 years ago at a cost of $4,000. A new machine is now needed, and one is available for $7,000 less a $1,000 trade-in allowance for the old machine. The market value of the old machine without trade-in on a new model is $500. Which of the four dollar values above is a sunk cost that is irrelevant in a pre-tax engineering economic analysis? Group of answer choices $7,000 $1,000 $4,000 $500 Flag question: Question 8