last for 5 years. The salvage value is

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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install cost of the new machinery is $400,000 and is expected to last for 5 years. The salvage value is expected to be $30,000 in today’s dollars.


Revenue is expected to increase by $40,000 while operating costs are expected to increase $2500 (both actual).


Determine the present worth of the project, assuming an (actual) MARR of 10%, a CCA rate of 10% and a corporate tax rate of 15%.

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