In conducting an EVA analysis for year 2 for new equipment on its primary product line, Analogy,
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In conducting an EVA analysis for year 2 for new equipment on its primary product line, Analogy, Inc., manufacturers of preassembled blower packages and other water treatment components, determined the EVA to be $28,000. Analogy uses an after-tax interest rate of 14% per year and its Te is 35%. The new equipment had a first cost of $550,000 and was MACRS depreciated using a 3-year recovery period. Since the company CEO knew that the GI was $500,000, he asked you to determine the operating expenses (OE) associated with the equipment in year 2.
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