A granary purchases a conveyor used in the manufacture of grain for transporting, filling, or emptying. The

Question:

A granary purchases a conveyor used in the manufacture of grain for transporting, filling, or emptying. The conveyor is considered MACRS-GDS 10-year property (remember the half-year convention). It is purchased and installed for \($70,000\) with a market value for salvage purposes that decreases at a rate of 20 percent per year with a minimum of \($3,000.\) Operation and maintenance is expected to cost \($14,000\) in the first year, increasing by \($1,000\) per year thereafter. The granary is in the 40 percent tax bracket, and their after-tax MARR is 9 percent. Determine the after-tax optimum replacement interval. Do not consider a Section 1031 exchange. If the salvage value differs from the book value when replacement occurs, the difference is taxed at the normal income tax rate.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Principles Of Engineering Economic Analysis

ISBN: 9781118163832

6th Edition

Authors: John A. White, Kenneth E. Case, David B. Pratt

Question Posted: