Amazon is building a new distribution facility in North Carolina. The new building is expected to cost $9.53 million. You can assume the facility will be open in January. Non-residential buildings depreciate over 39 years at 2.564% each year using straight line depreciation. The equipment, depreciates following the MACRS method and is classified as a 3-year property (table at the end of document) will cost $5.55 million plus installation and start-up costs of $725,000. Maintenance is expected to be $1.3 million in the first year and increase 6% annually. In North Carolina manufacturing facilities pay a flat state tax rate of 5.25%. Amazon will also have to pay federal taxes following the corporate income tax rate table below. The expected revenue of sales from products manufactured in the new facility are shown in the table below. What is the net present worth of the after-tax cash flows for the first 5 years of the facility using an MARR of 15%?

Taxable Income Tax Rate

$0 - $50,000 15%

$50,001 - $75,000 25%

$75,001 - $100,000 34%

$100,001 - $335,000 39%

$335,001 - $10 Million 34%

$10 Million - $15 Million 35%

> $15 Million 38%

Here are the specific parts we will look for when grading. This should also help you to include all of the parts of the problem.

1. Formatting Tables: Is easy to follow your spread sheet? The TA should be able to look at your sheet and by column titles and formulas in the cells understand what you did.

2. Depreciation (building and equipment)

3. BTCF

4. State Tax

5. Federal Tax

6. ATCF

7. PV of ATCF