Question
A new Stout engineer who just was hired by Machine Excellence is pushing for a brand new laser machining center. He insists that it is
A new Stout engineer who just was hired by Machine Excellence is pushing for a brand new laser machining center. He insists that it is a money maker from the first day. He did not figure the deprecation and the after taxes cash flow (CFAT). Give this rookie engineer a little intelligent guidance here on the CFAT for a ROR analysis of the new laser equipment. Here are the figures for the production machining equipment for making detailed laser signs and complex shapes. Calculate the CFAT and ROR for the end of 6 years. Answer the question: "Is the investment economically viable"? Depr method: MACRS GDS Class life: 5 Years Depr recapture: Taxed as TI First cost: $550,000 Gross Income:$250,000 Expenses: $80,000 Salvage: 0 in year 6 Effective Tax Rate: 45% After-tax MARR: 10% per year compounded semiannually
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