A company is considering purchasing equipment that will cost $1,000,000. The equipment is Class 38 (CCA rate = 30%). The equipment will add $80,000 in production costs each year and will produce revenues of $400,000 per year. The equipment will be used for seven years than sold for $50,000. Money will be borrowed to help pay for the equipment: $700,000 will be borrowed, at 7% interest. This loan must be repair in seven equal annual payments. The applicable tax rate is 29%, and a discount rate of 12% should be used, as this is the minimum acceptable rate of return (MARR) of the firm.

Calculate the loan repayment schedule, the CCA schedule, and the loss or gain on disposal. Calculate all revenues and expenses, and calculate the Net Present Worth of the proposed project.

A company is considering purchasing equipment that will cost $1,000,000. The equipment is Class 38 (CCA rate = 30%). The equipment will add $80,000 in production costs each year and will produce revenues of $400,000 per year. The equipment will be used for seven years than sold for $50,000. Money will be borrowed to help pay for the equipment: $700,000 will be borrowed, at 7% interest. This loan must be repair in seven equal annual payments. The applicable tax rate is 29%, and a discount rate of 12% should be used, as this is the minimum acceptable rate of return (MARR) of the firm. Calculate the loan repayment schedule, the CCA schedule, and the loss or gain on disposal. Calculate all revenues and expenses, and calculate the Net Present Worth of the proposed project