Question
A currently owned shredder originally costing $800,000 was purchased 6 years ago for use in a refuse-powered electrical generating plant. It was depreciated as MACRS-GDS
A currently owned shredder originally costing $800,000 was purchased 6 years ago for use in a refuse-powered
electrical generating plant. It was depreciated as MACRS-GDS 5-year property due to its status as an alternative energy item. It has a present net realizable value of $210,000 and is expected to have a market value of $10,000 after 4 more years. Operating and maintenance disbursements are $100,000 per year. An equivalent shredder can be leased for $200 per day plus $80 per hour of actual use as determined by an hour meter, with both components assumed to be paid at year-end. Actual use is expected to be 1,500 hours and 250 days per year. Use the cash flow approach (insiders approach), a 4-year planning horizon, a tax rate of 40 percent, and an after-tax MARR of 9 percent to perform an after-tax analysis to determine the preferred alternative using the annual cost criterion.
Use only the above information. (11.2.2)
Consider the addition of a third alternative, to operate without any shredder, at an annual cost of $190,000. (11.2.2)
A currently owned shredder originally costing $800,000 was purchased 6 years ago for use in a refuse-powered electrical generating plant. It was depreciated as MACRS-GDS 5-year property due to its status as an alternative energy item. It has a present net realizable value of $210,000 and is expected to have a market value of $10,000 after 4 more years. Operating and maintenance disbursements are $100,000 per year. An equivalent shredder can be leased for $200 per day plus $80 per hour of actual use as determined by an hour meter, with both components assumed to be paid at year-end. Actual use is expected to be 1, 500 hours and 250 days per year. Use the cash flow approach (insider's approach), a 4-year planning horizon, a tax rate of 40 percent, and an after-tax MARR of 9 percent to perform an after-tax analysis to determine the preferred alternative using the annual cost criterion. Use only the above information. (11.2.2) Consider the addition of a third alternative, to operate without any shredder, at an annual cost of $190,000. (11.2.2)Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started