Financial Engineering

Question 4

Elena's Caf is investing in a new commercial refrigeration unit that will cost $40,000. They estimate that the unit will produce annual revenues of $11,000 for each of the next 6 years. The refrigeration unit will have negligible salvage value at the end of the next 6 years. Assuming a tax rate of 25%, a MACRS 5-year property class, 50% bonus depreciation, and an after-tax MARR of 8%, compute the present worth of the refrigeration unit and determine whether or not Elena's Caf should invest in the refrigeration unit.

(a) What is the present worth? Make a detailed spreadsheet table of all the components. Indicate all the formulas. Carry all interim calculations to 5 decimal places and then round final answer to a whole number.

(b) Should Elena's Caf invest in the refrigeration unit? Yes. No. Not enough information.

I need the answer ASAP. The wrong answer will get downvoted. Thanks.