A company is considering the purchase of a capital asset for $110,000. Installation charges needed to make the asset serviceable will total $25,000. The asset will be depreciated over six years using the straight-line method and an estimated salvage value (SV6) of $24,000. The asset will be kept in service for six years, after which it will be sold for $29,000. During its useful life, it is estimated that the asset will produce annual revenues of $25,000. Operating and maintenance (O&M) costs are estimated to be $6,500 in the first year. These O&M costs are projected to increase by $1,500 per year each year thereafter. The after tax MARR is 9% and the effective tax rate is 25%. a. Compute the after-tax cash flows. b. Compute the after-tax present worth of the project, and use a uniform gradient in your formulation. c. The before-tax present worth of this asset is $57,642. By how much would the annual revenues have to increase to make the purchase of this asset justifiable on a before-tax basis?

A company is considering the purchase of a capital asset for $110,000. Installation charges needed to make the asset serviceable will total $25,000. T asset will be depreciated over six years using the straight-line method and an estimated salvage value (SV) of $24,000. The asset will be kept in servi for six years, after which it will be sold for $29,000. During its useful life, it is estimated that the asset will produce annual revenues of $25,000. Operati and maintenance (O&M) costs are estimated to be $6,500 in the first year. These O&M costs are projected to increase by $1,500 per year each year thereafter. The after tax MARR is 9% and the effective tax rate is 25%. a. Compute the after-tax cash flows. b. Compute the after-tax present worth of the project, and use a uniform gradient in your formulation. c. The before-tax present worth of this asset is - $57,642. By how much would the annual revenues have to increase to make the purchase of this ass justifiable on a before-tax basis? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 9% per year. a. Calculate the after-tax cash flows and fill in the table below. (Round to the nearest dollar.) (A) BTCF, $ EOY (C) = (A)-(B) Taxable income, (B) Depreciation, $ D = -0.25(C) Income Taxes, S (E) = (A) + (D) ATCF, S 0 More Info - Discrete Compounding; i = 9% Uniform Series Single Payment N 1 2 3 4 Compound Amount Factor To Find F Given P FIP 1.0900 1.1881 1.2950 1.4116 1.5386 1.6771 1.8280 1.9926 2.1719 2.3674 Present Worth Factor To Find P Given F P/F 0.9174 0.8417 0.7722 0.7084 0.6499 0.5963 0.5470 0.5019 0.4604 0.4224 Compound Amount Factor To Find F Given A FIA 1.0000 2.0900 3.2781 4.5731 5.9847 7.5233 9.2004 11.0285 13.0210 15.1929 Present Worth Factor To Find P Given A PIA 0.9174 1.7591 2.5313 3.2397 3.8897 4.4859 5.0330 5.5348 5.9952 6.4177 Sinking Fund Factor To Find A Given F A/F 1.0000 0.4785 0.3051 0.2187 0.1671 0.1329 0.1087 0.0907 0.0768 0.0658 Capital Recovery Factor To Find A Given P A/P 1.0900 0.5685 0.3951 0.3087 0.2571 0.2229 0.1987 0.1807 0.1668 0.1558 Uniform Gradient Gradient Gradient Present Uniform Worth Series Factor Factor To Find P To Find A Given G Given G P/G A/G 0.0000 0.0000 0.8417 0.4785 2.3860 0.9426 4.5113 1.3925 7.1110 1.8282 10.0924 2.2498 13.3746 2.6574 16.8877 3.0512 20.5711 3.4312 24.3728 3.7978 5 6 7 8 9 10 Print Done A company is considering the purchase of a capital asset for $110,000. Installation charges needed to make the asset serviceable will total $25,000. T asset will be depreciated over six years using the straight-line method and an estimated salvage value (SV) of $24,000. The asset will be kept in servi for six years, after which it will be sold for $29,000. During its useful life, it is estimated that the asset will produce annual revenues of $25,000. Operati and maintenance (O&M) costs are estimated to be $6,500 in the first year. These O&M costs are projected to increase by $1,500 per year each year thereafter. The after tax MARR is 9% and the effective tax rate is 25%. a. Compute the after-tax cash flows. b. Compute the after-tax present worth of the project, and use a uniform gradient in your formulation. c. The before-tax present worth of this asset is - $57,642. By how much would the annual revenues have to increase to make the purchase of this ass justifiable on a before-tax basis? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 9% per year. a. Calculate the after-tax cash flows and fill in the table below. (Round to the nearest dollar.) (A) BTCF, $ EOY (C) = (A)-(B) Taxable income, (B) Depreciation, $ D = -0.25(C) Income Taxes, S (E) = (A) + (D) ATCF, S 0 More Info - Discrete Compounding; i = 9% Uniform Series Single Payment N 1 2 3 4 Compound Amount Factor To Find F Given P FIP 1.0900 1.1881 1.2950 1.4116 1.5386 1.6771 1.8280 1.9926 2.1719 2.3674 Present Worth Factor To Find P Given F P/F 0.9174 0.8417 0.7722 0.7084 0.6499 0.5963 0.5470 0.5019 0.4604 0.4224 Compound Amount Factor To Find F Given A FIA 1.0000 2.0900 3.2781 4.5731 5.9847 7.5233 9.2004 11.0285 13.0210 15.1929 Present Worth Factor To Find P Given A PIA 0.9174 1.7591 2.5313 3.2397 3.8897 4.4859 5.0330 5.5348 5.9952 6.4177 Sinking Fund Factor To Find A Given F A/F 1.0000 0.4785 0.3051 0.2187 0.1671 0.1329 0.1087 0.0907 0.0768 0.0658 Capital Recovery Factor To Find A Given P A/P 1.0900 0.5685 0.3951 0.3087 0.2571 0.2229 0.1987 0.1807 0.1668 0.1558 Uniform Gradient Gradient Gradient Present Uniform Worth Series Factor Factor To Find P To Find A Given G Given G P/G A/G 0.0000 0.0000 0.8417 0.4785 2.3860 0.9426 4.5113 1.3925 7.1110 1.8282 10.0924 2.2498 13.3746 2.6574 16.8877 3.0512 20.5711 3.4312 24.3728 3.7978 5 6 7 8 9 10 Print Done