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Cash flow from increased profits on a company car is expected to be $44,000 per year. The car costs $38,000, and it is expected to
Cash flow from increased profits on a company car is expected to be $44,000 per year. The car costs $38,000, and it is expected to have a life of six years with a salvage value of $2,000. It will be depreciated using straight line depreciation. Determine the after-tax Present Worth of the cost of the car and the profits from the car with a tax rate of 28% and a MARR of 8%. Research and development equipment is being purchased for asphalt testing. It will result in profits of $60,000 per year. The equipment will cost $140,000, and will be depreciated using MACRS with GDS. Determine the after-tax cash flows over six years, and calculate the after-tax Present Worth of the asset [from its purchase cost and increased profits] using a tax rate of 28% and a MARR of 10%
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