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Five years ago a chemical plant investeol. $ 95,000 in a pumping station en of Nearshey sive to provide the water tequifecol toy their productim
Five years ago a chemical plant investeol. $ 95,000 in a pumping station en of Nearshey sive to provide the water tequifecol toy their productim process. Straight-line depreciation is employeal for farl purposes using a 30-year Mite and Zexo Labiage Valut. A wearby city has, offered to purchase the pumping stating for $75,000 as it is in the process of developing a city water distribution System. The spenning city is willing to sign a 10-year contract with the plant to provide the plant with its Yeguireel volume of water for a price of $ 80,000 per year. Plant officials estimate that the salvage value of the pumping Station 10 yearss hence will be assurant about $27,000 The before- tase MARR is 10% per year. An effective income tax rate of 30% is to be assumesl. compare the amuse! cost Catter toxas) of the defender (keep the pumping elitution) to the challenger Casill station to the city) Amal help plant management determine the more economical course of antien. Assume astudy periool is to years The EUAC Defender is? The Evac challenger du
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