Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

FAME Industries is a small business expanding its machining operations and plans to purchase 10CNC machines for a total of $1,350,000; this is considered MACRS

image text in transcribed

FAME Industries is a small business expanding its machining operations and plans to purchase 10CNC machines for a total of $1,350,000; this is considered MACRS 5-year property. The business estimates that these machines will generate an additional revenue of $270,000 per year; they plan to keep the machines for the next 8 years. At the end of 8 years, the CNC machines would have a salvage value of $170,000. The tax rate is 22%, the CNC machines are eligible for a Section 179 deduction, and FAME Industrie uses an after-tax MARR of 9\%. Compute the PW and determine whether FAME Industries should invest in the CNC machines. Click here to access the TVM Factor Table calculator. Click here to access the MACRS-GDS Property Classes. Click here to access the MACRS-GDS percentages page. Click here to access the MACRS-GDS percentages for 27.5-year residential rental property. $ Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. The tolerance is 20. Should FAME Industries invest in the CNC machines? FAME Industries is a small business expanding its machining operations and plans to purchase 10CNC machines for a total of $1,350,000; this is considered MACRS 5-year property. The business estimates that these machines will generate an additional revenue of $270,000 per year; they plan to keep the machines for the next 8 years. At the end of 8 years, the CNC machines would have a salvage value of $170,000. The tax rate is 22%, the CNC machines are eligible for a Section 179 deduction, and FAME Industrie uses an after-tax MARR of 9\%. Compute the PW and determine whether FAME Industries should invest in the CNC machines. Click here to access the TVM Factor Table calculator. Click here to access the MACRS-GDS Property Classes. Click here to access the MACRS-GDS percentages page. Click here to access the MACRS-GDS percentages for 27.5-year residential rental property. $ Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. The tolerance is 20. Should FAME Industries invest in the CNC machines

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions