6. An auto-parts producer is considering buying a new material handling system which has a purchase price of $150,000, a useful life and MACRS class life of 5 years, and a salvage value of $13,000. The system will allow the company to save an amount of $80,000 each year due to a lower use of electric power and labor. The company has a tax rate of 35%. The initial investment will be financed with 45% equity and 55% debt. The interest rate on both short-term and long-term financing is 13% and the loan is to be repaid in equal annual amounts over the project life. 7 Click the icon to view the MACRS depreciation schedules. 8 Click the icon to view the interest factors for discrete compounding when = 13% per year. 9 Click the icon to view the interest factors for discrete compounding when i= 20% per year. (a) Prepare income and cashflow statements in table format and determine the after-tax cash flows below. (Round to the nearest dollar.) Period 0 1 2 3 4 5 69 EA Net Cash Flow (b) Under a MARR of 20%, the net present worth of the project is $ Therefore, the project (1)- be accepted. (c) The internal rate of return (IRR) of the project is (2) be accepted. 7: More Info (Round to the nearest dollar.) %. (Round to two decimal places.) Therefore, it Class Depreciation 10 15 20 Year n 200% 200% 200% 200% 150% 150% rate 1 33.33 20.00 14.29 10.00 5.00 3.750 2 44.45 32.00 24.49 18.00 9.50 7.219 3 14.81 19.20 17.49 14.40 8.55 6.677 4 7.41 11.52 12.49 11.52 7.70 6.177 5 11.52 8.93 9.22 6.93 5.713 6 5.76 8.92 7.37 6.23 5.285 7 8.93 6.55' 5.90 4.888 8 4.46 6.55 5.90 4.522 9 6.56 5.91 4.462 10 6.55 5.90 4.461 11 3.28 5.91 4.462 23 12 5.90 4.461 13 5.91 4.462 14 15 16 17 18 19 20 21 5.90 4.461 5.91 4.462 2.95 4.461 4.462 4.461 4.462 4.461 2.231 *Year to switch from declining balance to straight line 8: More Info Single Payment Compound Present Amount Worth Factor Factor N (F/P, i, N) (P/F, i, N) Compound Amount Factor (F/A, i, N) Sinking Present Fund Worth Factor Factor (A/F, i, N) (P/A, i, N) Equal Payment Series Capital Recovery Factor (A/P, i, N) 1 1.1300 0.8850 1.0000 1.0000 0.8850 1.1300 2 1.2769 0.7831 2.1300 0.4695 1.6681 0.5995 3 1.4429 0.6931 3.4069 0.2935 2.3612 0.4235 4 1.6305 0.6133 4.8498 0.2062 2.9745 0.3362 5 1.8424 0.5428 6.4803 0.1543 3.5172 0.2843 618 a 2.0820 0.4803 8.3227 0.1202 3.9975 0.2502 7 2.3526 0.4251 10.4047 0.0961 4.4226 0.2261 2.6584 0.3762 12.7573 0.0784 4.7988 0.2084 9 3.0040 0.3329 15.4157 0.0649 5.1317 0.1949 10 3.3946 0.2946 18.4197 0.0543 5.4262 0.1843 Single Payment Equal Payment Series Compound Present Compound Sinking Present Capital Amount Worth Factor Factor N (F/P, i, N) (P/F, i, N) Amount Factor (F/A, i, N) Fund Factor Worth Recovery Factor Factor (A/F, i, N) (P/A, i, N) (A/P, i, N) 1 1.2000 0.8333 1.0000 1.0000 0.8333 1.2000 2 1.4400 0.6944 2.2000 0.4545 1.5278 0.6545 3 1.7280 0.5787 3.6400 0.2747 2.1065 0.4747 4 2.0736 0.4823 5.3680 0.1863 2.5887 0.3863 5 2.4883 0.4019 7.4416 0.1344 2.9906 0.3344 6 2.9860 0.3349 9.9299 0.1007 3.3255 0.3007 7 3.5832 0.2791 12.9159 0.0774 3.6046 0.2774 8 4.2998 0.2326 16.4991 0.0606 3.8372 0.2606 9 5.1598 0.1938 20.7989 0.0481 4.0310 0.2481 10 6.1917 0.1615 25.9587 0.0385 4.1925 0.2385 (1) should not (2) should not should should