53. Video Solution Raytheon wishes to use an automated environmental chamber in the manufacture of electronic components.
Question:
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.
Step by Step Answer:
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