Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A company is considering the purchase of a capital assel for 5130,000 . Instrlation charges needed to make the assel serviceable will tota 525,000 .

image text in transcribed
A company is considering the purchase of a capital assel for 5130,000 . Instrlation charges needed to make the assel serviceable will tota 525,000 . The assef will be depreciated ever six years using the Itraight-line method and an estimated salvage value (SV, of $29,000. The asset wil be kept in service for six years, after which it wil be sold for 534,000 . During its usetal lfe, it is estimated that the asset wil procuce annual revenues of $25.000, Operating and maintenance (OsM) coets are estimaded to be $6. 500 in the firt jear, These OsM costs are projected to increase by $1,500 per year each year thereatler. The afler tax MARR is 15 is and the effective tax rate is 25%. a. Conpute the after-tax cash fows. b. Conpute the ather-tax present worth of the proiect, and uac a uniform gradent in your faemulation. c. The before-tax presert worth of this asset is $91,962. By how much would the anneat revenues have to increase to make the purchase of this asset justifisele on a beforectas basis? Click the ioon to view the irterest and annuity table for dscrete compounding when the MARR is 16 ser year. a. Calcuate the affertar cash flows and fil in the table below. (Flound to the nearest dollar.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

A Comprehensive Guide To Information Security Management And Audit

Authors: Rajkumar Banoth, Gugulothu Narsimha, Aruna Kranthi Godishala

1st Edition

1032344431, 978-1032344430

More Books

Students also viewed these Accounting questions