Nordique Fab is an Arizona company dedicated to circuit board design and fabrication. It has just acquired new workstations and modeling software for its three "Valley of the Sun" design facilities, at a cost of $405,000 per site. This cost includes the hardware, software, transportation, and installation costs. Additional software training has been purchased at a cost of $22,000 per site. The estimated MV for each system during the fourth year is expected to be 6% of the system cost, at which time the systems will all be sold. The company believes that use of the new systems will enhance their circuit design business, resulting in a total increase in annual income of $950,000. The engineering design manager wants to determine the tax implications of this purchase. He estimates that annual operating and maintenance costs on the systems will be approximately $170,000 (all sites combined). The company's marginal effective tax rate is 30% and the MACRS depreciation method (with a five year GDS recovery period) will be used. Determine the after-tax cash flows for this project. If the after-tax MARR is 21% per year, would you recommend this investment? Click the icon to view the partial listing of depreciable assets used in business Click the icon to view the GDS Recovery Rates (r). Click the icon to view the interest and annuity table for discrete compounding when the MARR is 21% per year. Determine the after-tax cash flows for each year. (Round to the nearest dollar.) EOY ATCF, $ 0 MACRS Class Lives and Recovery Periods Asset Class 00.11 00.12 00.22 00.23 00.241 00.242 00.26 01.1 10.0 13.2 13.3 15.0 22.3 1 24.4 Descriptions of Assets Office furniture and equipment Information systems, including computers Automobiles, taxis Buses Light general purpose trucks Heavy general purpose trucks Tractor units for use over the road Agriculture Mining Production of petroleum and natural gas Petroleum refining Construction Manufacture of carpets Manufacture of wood products and furniture Manufacture of chemicals and allied products Manufacture of rubber products Manufacture of cement Manufacture of fabricated metal products Manufacture of electronic components, products, and systems Manufacture of motor vehicles Manufacture of aerospace products Telephone central office equipment Electric utility steam production plant Gas utility distribution facilities Recreation Class Life 10 6 3 9 4 6 4 10 10 14 16 6 9 10 9.5 14 20 12 6 12 10 18 28 35 10 Recovery Periods GDS ADS 7 10 5 5 5 5 5 9 5 5 6 3 4 7 10 7 10 7 14 10 16 5 6 5 9 7 10 5 9.5 7 14 15 20 7 12 5 6 7 12 7 10 10 18 20 28 20 35 7 10 28.0 30.1 32.2 34.0 36.0 37.11 37.2 48.12 49.13 49.21 279.0 Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 GDS Recovery Rates (r) for the Six Personal Property Classes Recovery Period (and Property Class) 3-year 5-year 7-year 10-year 15-year 0.3333 0.2000 0.1429 0.1000 0.0500 0.4445 0.3200 0.2449 0.1800 0.0950 0.1481 0.1920 0.1749 0.1440 0.0855 0.0741 0.1152 0.1249 0.1152 0.0770 0.1152 0.0893 0.0922 0.0693 0.0576 0.0892 0.0737 0.0623 0.0893 0.0655 0.0590 0.0446 0.0655 0.0590 0.0656 0.0591 0.0655 0.0590 0.0328 0.0591 0.0590 0.0591 0.0590 0.0591 0.0295 20-year 0.0375 0.0722 0.0668 0.0618 0.0571 0.0528 0.0489 0.0452 0.0447 0.0447 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0223 Discrete Compounding; i = 21% Single Payment Uniform Series Compound Compound Sinking Amount Present Amount Present Fund Factor Worth Factor Factor Worth Factor Factor To Find F To Find P To Find F To Find P To Find A Given P Given F Given A Given A Given F FIP PIE FIA PIA AIF 1.2100 0.8264 1.0000 0.8264 1.0000 1.4641 0.6830 2.2100 1.5095 0.4525 1.7716 0.5645 3.6741 2.0739 0.2722 2.1436 0.4665 5.4457 2.5404 0.1836 2.5937 0.3855 7.5892 2.9260 0.1318 N Capital Recovery Factor To Find A Given P AIP 1.2100 0.6625 0.4822 0.3936 0.3418 Print Done