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A firm must decide between two silicon layer chip designs from Intel. Their effective income tax rate is 41%, and MACRS depreciation is used. If
A firm must decide between two silicon layer chip designs from Intel. Their effective income tax rate is 41%, and MACRS depreciation is used. If the desired after-tax return on investment is 9% per year, which design should be chosen? Design A Design B Capital investment $940,000 $1,930,000 MV at end of useful life $940,000 $1,090,000 Annual revenues less expenses $170,000 $440,000 MACRS property class 5 years 5 years Useful life 7 years 6 years Click the icon to view the GDS Recovery Rates (r) for the 5-year property class. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 9% per year. 5 - Calculate the AW value for the Design A. AWA(9%) = $ (Round to the nearest hundreds.) More Info Calculate the AW value for the Design B. nd to the nearest hundreds.) Based on the AW values, Design A should be chosen. GDS Recovery Rates (rk) Year 5-year Property Class 0.2000 0.3200 0.1920 0.1152 0.1152 0.0576 Enter your answer in each of the answer boxes. A firm must decide between two silicon layer chip designs from Intel. Their effective income tax rate is 41%, and MACRS depreciation is used. If the desired after-tax return on investment is 9% per year, which design should be chosen? Design A Design B Capital investment $940,000 $1,930,000 MV at end of useful life $940,000 $1,090,000 Annual revenues less expenses $170,000 $440,000 MACRS property class 5 years 5 years Useful life 7 years 6 years Click the icon to view the GDS Recovery Rates (r) for the 5-year property class. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 9% per year. 5 - Calculate the AW value for the Design A. AWA(9%) = $ (Round to the nearest hundreds.) More Info Calculate the AW value for the Design B. nd to the nearest hundreds.) Based on the AW values, Design A should be chosen. GDS Recovery Rates (rk) Year 5-year Property Class 0.2000 0.3200 0.1920 0.1152 0.1152 0.0576 Enter your answer in each of the answer boxes
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