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Engineering economics Problem 2 A firm has invested $250,000 in car-washing equipment. They will depreciate the equipment by sum-of years-digits depreciation (SOYD), assuming a $50,000
Engineering economics
Problem 2 A firm has invested $250,000 in car-washing equipment. They will depreciate the equipment by sum-of years-digits depreciation (SOYD), assuming a $50,000 salvage value at the end of the 5-year useful life. The firm is expected to have a before-tax cash flow, after meeting all expenses of operation (except depreciation), of $90,000 per year. The firm's combined corporate tax rate is 30%. If the projected income is correct, the equipment can be sold for $50,000 at the end of 5 years. Complete the table below and determine what after-tax rate of return (ROR) would the corporation receive from this venture? BTCF SOYD Method ATCF (After Year (Before Tax Cash Flow) TI (Taxable Income) Income Taxs Tax Cash BV (Book Value) Dt flow) 0 Total Depreciation Rate of Return (ROR) Page 1 of 3 Step by Step Solution
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