Your firm is planning to install a CNC machine for manufacturing finished plastic parts. This machine...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Your firm is planning to install a CNC machine for manufacturing finished plastic parts. This machine has an initial cost of $1,000,000 and is expected to generate net income of $325,000 per year for the next 4 years. Using 40% bonus depreciation followed by MACRS depreciation, $50,000 salvage value, a federal tax rate of 21%, a state tax rate of 5%, and an after-tax MARR of 6%, determine the net present worth of this investment. Year 0 1234 1 2 Year 0 1 2 234 3 Before-Tax Cash Flow Income Taxes Depreciation After-Tax Cash Flow Net present worth Taxable Income Present Worth Your firm is planning to install a CNC machine for manufacturing finished plastic parts. This machine has an initial cost of $1,000,000 and is expected to generate net income of $325,000 per year for the next 4 years. Using 40% bonus depreciation followed by MACRS depreciation, $50,000 salvage value, a federal tax rate of 21%, a state tax rate of 5%, and an after-tax MARR of 6%, determine the net present worth of this investment. Year 0 1234 1 2 Year 0 1 2 234 3 Before-Tax Cash Flow Income Taxes Depreciation After-Tax Cash Flow Net present worth Taxable Income Present Worth
Expert Answer:
Answer rating: 100% (QA)
Steps Step 1 of 3 Initial cost of investment 1000000 Profit after tax per year 325000 Time period 4 ... View the full answer
Related Book For
Contemporary Business Mathematics with Canadian Applications
ISBN: 978-0134141084
11th edition
Authors: S. A. Hummelbrunner, Kelly Halliday, Ali R. Hassanlou, K. Suzanne Coombs
Posted Date:
Students also viewed these finance questions
-
Your firm is planning to develop a customer relationship management (CRM) initiative after it moves into international markets. One way to understand the similarity or dissimilarity of markets and...
-
A project has an initial cost of $48,000, which will be depreciated straight-line to zero over the 6-year life of the project. The annual net income for each of the 6 years is $3,800, $4,100, $4,600,...
-
A cost-cutting project has an initial cost of $1,200 and annual costs of $380 for each year of the project's 4-year life. The equivalent annual cost for this project is best described as the: 4-year...
-
Assume that on July 1, 2014, Big Corp. loaned little Corp. $12,000 for aperiod of one year at 6percent interest. What amount of interest revenue will big report for 2014? What amount of cash will big...
-
Determine the voltage transfer function and its magnitude characteristic for the network shown in figure and identify the filterproperties. R2 R1 C2 v,() volt)
-
During your examination of Debold Batteries, Ltd, you conclude there is a possibility that inventory is materially overstated. The client refuses to allow you to expand the scope of your examination...
-
Fill in the blanks: 8 NUMBER OF YEARS 18 28 Amount of annual cash inflow* $10,000 $ 7,000 Required initial investment $80,000 $29,099 Internal rate of return 18% 16% % Minimum desired rate of return...
-
The workload in many areas of bank operations has the characteristics of a non-uniform distribution with respect to time of day. For example, at Chase Manhattan Bank in New York, the number of...
-
r, the correlation coefficient, using the following data. x 6 y 2 46 4 8 6 1 (Round to three decimal places.) 53 2 26
-
There is a parcel of land next to the Playful Paws, Inc. building. Ellen, the owner of this property, approached John to discuss the idea of selling it to him. John is interested. Ellen knows that...
-
Suppose that the current one-year rate (one-year spot rate) andexpected one-year T-bill rates over the following three years(i.e., years 2, 3, and 4, respectively) are as follows:1R1 = 0.4%,E(2r 1...
-
Indrek just finished a residency in holistic spiritual internal medicine and wants to go into practice with Kaarel and Einari, all three come from Estonia and attended Tartu Holistic Studies, part of...
-
The defendants in the above case argued that the Coca-Cola Trademark was not entitled to protection under the law because the term did not accurately represent the product. Did the Court agree with...
-
Next choose an area of business law, such as employment law, contract law, finance law, or environmental law. Name the area of business law you selected, describe what value you think these types of...
-
To maintain product delivery times, Ready Energy production lines have increased work and handling of finished material and raw materials have taken a backseat. Initially, the delivery of finished...
-
You are the vice president for support services at Sunrise Nursing and Rehabilitation Center. Frances "Frankie" Hammerman, the full-time coordinator of volunteers, reports to you. She has held that...
-
point(s ) POSE A credit union entered a lease contract valued at $5400. The contract provides for payments at the end of each quarter for 2 years. If interest is 6.8% compounded quarterly, what is...
-
In Problems, solve each system of equations. x + 2y + 3z = 5 y + 11z = 21 5y + 9z = 13
-
Suppose a firm has two business options to choose from and has asked you - a Business Mathematics student - to help them make a decision. Option "A" requires an immediate cost of $20 000 along with...
-
Pamela borrowed $15 000.00 for investment purposes on March 12 on a demand note providing for a variable rate of interest and payment of any accrued interest on December 31. She repaid $1500.00 on...
-
What is the face value of a three-month promissory note dated June 18, 2018, with interest at 4.5 percent, if its maturity value is $950.89?
-
Parks Canada prepared the following budget for one of its national parks for 2006: The fees were based on an average of 50,000 vehicle-admission days (vehicles multiplied by number of days in park)...
-
The L. Ming Company has had great difficulty controlling costs in Singapore during the past three years. Last month a standard cost and flexible-budget system was installed. Results for a department...
-
Cost-behaviour analysis for the four activity centres in the Billing Department of Great Lakes Power Company is as follows: 1. Develop flexible budget formulas for each of the four activity centres....
Study smarter with the SolutionInn App