53. Video Solution Raytheon wishes to use an automated environmental chamber in the manufacture of electronic components.

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53. Video Solution 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,

$600,000 of which is borrowed at 11% for 5 years, 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. Corporate income taxes are 40%. Develop tables using a spreadsheet to determine the ATCF for each year, and the after-tax PW, AW, IRR and ERR if the chamber is kept for 8 years. After-tax MARR is 10%. Determine for each year the ATCF and the PW, FW, AW, IRR, and ERR for the investment if (for parts

a, b, and

c, use straight-line depreciation (over 8 years with no half-year convention), and for parts

d, e, and

f, use MACRS-GDS depreciation with the appropriate property class):

a,d. The loan is paid back using Plan 1.

b,e. The loan is paid back using Plan 2.

c,f. The loan is paid back using Plan 3.

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Fundamentals Of Engineering Economic Analysis

ISBN: 9781118414705

1st Edition

Authors: John A. White, Kellie S. Grasman, Kenneth E. Case, Kim LaScola Needy, David B. Pratt

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