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 the
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?
for years 1-5, what is the before tax cash flow value to be used?
for years 1-5, what is the straight line depreciationvalue to be used?
for years 1-5, what is the taxable incomevalue to be used?
for years 1-5, what is the income tax value to be used?
for years 1-5, what is the after tax cash flow value to be used?
what is the break even equation setup
what is the break even value?
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