Raytheon wishes to use an automated environmental chamber in the manufacture of electronic components. The chamber is
Question:
Raytheon wishes to use an automated environmental chamber in the manufacture of electronic components. The chamber is to be used for rigorous reliability testing and burn-in. It is installed for \($1.4\) million and will have a salvage value of \($200,000\) after 8 years. Its use will create an opportunity to increase sales by \($650,000\) per year and will have operating expenses of \($250,000\) per year. All dollar amounts are expressed in real dollars.
Depreciation follows MACRS 5-year property, taxes are 40 percent, the real after-tax MARR is 10 percent, and inflation is 4.2 percent.
a. Determine the actual after-tax cash flows for each year.
b. Determine the PW of the after-tax cash flows.
c. Determine the AW of the after-tax cash flows.
d. Determine the FW of the after-tax cash flows.
e. Determine the combined IRR of the after-tax cash flows.
f. Determine the combined ERR of the after-tax cash flows.
g. Determine the real IRR of the after-tax cash flows.
h. Determine the real ERR of the after-tax cash flows.
Step by Step Answer:
Principles Of Engineering Economic Analysis
ISBN: 9781118163832
6th Edition
Authors: John A. White, Kenneth E. Case, David B. Pratt