Question
A large company is planning to purchase equipment costing $250,000 and will depreciate it fully using straight-line depreciation over 5 years. The company expects that
A large company is planning to purchase equipment costing $250,000 and will depreciate it fully using straight-line depreciation over 5 years. The company expects that the investment will have an annual benefit of $64,000. Each use of the equipment will also provide a benefit of $30. In 5 years, there will be no salvage value for the equipment. The company's combined marginal tax rate is 30%. Based on 18% after-tax MARR, how many uses of the equipment must the company have each year in order to justify its investment?
Question 5 Part F: For years 1 - 5, what is the After-Tax Cash Flow (ATCF) value to be used?
59800+21X
9800-21X
68200+21X
59800+39X
Question 5 Part G: What is the correct break-even equation setup?
-250000(A/P, 18%, 5)+59800+21X=0
-250000(A/P, 18%, 5)+59800+39X=0
-250000(P/A, 18%, 5)+9800-21X=0
-250000(P/A, 18%, 5)+59800+39X=0
Question 5 Part H: What is the break-even value? Enter your answer in the form: 12345.67
Question 5 Part I: Provide a statement to your answer to Part H.
Both A & B
C: The company needs the maximum amount found in part "g" per year for 5-year planning horizon to break-even
A: The company needs the exact amount found in part "g" per year for 5-year planning horizon to break-even
B: The company needs the minimum amount found in part "g" per year for 5-year planning horizon to break-even
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