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3) (25 p.) Below table shows the calculations for an after-tax analysis of a machine purchase alternative. EOY BTCF ATCF 0 1 2 3 4
3) (25 p.) Below table shows the calculations for an after-tax analysis of a machine purchase alternative. EOY BTCF ATCF 0 1 2 3 4 5 6 - 20,000 16,000 16,000 16,000 16,000 16,000 18,000 Depreciation Deduction 0 3,000 3,000 3,000 3,000 3,000 3,000 Taxable Income 0 13,000 13,000 13,000 13,000 13,000 15,000 Income Taxes 0 - 6,500 - 6,500 - 6,500 - 6,500 - 6,500 - 7,500 - 20,000 9,500 9,500 9,500 9,500 9,500 10,500 ii. a) Find answers to the below questions i. What are the cost basis (price) and annual revenues less expenses? What is the terminal market value (or salvage value)? iii. What is the income tax rate? iv. What is the method used for depreciation deduction? v. What is the book value at the end of useful life? b) Calculate the equivalent present worth (PW) and the equivalent annual worth (AW) at an after-tax MARR of 9%. 3) (25 p.) Below table shows the calculations for an after-tax analysis of a machine purchase alternative. EOY BTCF ATCF 0 1 2 3 4 5 6 - 20,000 16,000 16,000 16,000 16,000 16,000 18,000 Depreciation Deduction 0 3,000 3,000 3,000 3,000 3,000 3,000 Taxable Income 0 13,000 13,000 13,000 13,000 13,000 15,000 Income Taxes 0 - 6,500 - 6,500 - 6,500 - 6,500 - 6,500 - 7,500 - 20,000 9,500 9,500 9,500 9,500 9,500 10,500 ii. a) Find answers to the below questions i. What are the cost basis (price) and annual revenues less expenses? What is the terminal market value (or salvage value)? iii. What is the income tax rate? iv. What is the method used for depreciation deduction? v. What is the book value at the end of useful life? b) Calculate the equivalent present worth (PW) and the equivalent annual worth (AW) at an after-tax MARR of 9%
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