Note: The present value (PV) factor for N periods and rate r per period =1(1+r)N. For example, the PV factor for 10%,5 years =1(1+0.10)5=0.621 TARI .F. 2 Precent Value of Annuity of $1 Note: The present value (PV) annuity factor for N periods and a rate of r per period =[1(1+r)N]r. For example, for N=5 and r=0.10, the PV The Mendoza Company discussed in the chapter is now considering replacing a piece of equipment that the company uses to monitor the integrity of metal pipes used for deep-sea drilling purposes. The company's pre-tax WACC (discount rate) is estimated as 10%. The following data are pertinent to the question you've been asked to analyze: equired: What is the maximum amount of annual variable operating expenses, pretax, that would make this an attractive investment from a resent-value standpoint? In answering this question, use the appropriate PV factor(s) from Appendix C, Table 1 and the appropriate V annuity factor from Appendix C, Table 2. (Round your answer to the nearest whole dollar amount.) . Assume now that the company expects, over the coming 6 years, to be subject to a combined income tax rate of 35%, including any ain/loss realized on the sale of the existing equipment. Assume that the current net book value of the existing asset is $78,000 and lat the after-tax WACC (discount rate) for Mendoza is 8%. Finally, assume that the company will use straight-line depreciation, with no alvage value, for income tax purposes. In this situation, what is the maximum amount of variable operating costs (on both a pre-tax nd on an after-tax basis) that can be incurred in order to make the proposed purchase attractive in a present-value sense? In nswering this question, use the appropriate PV annuity factor from Appendix C, Table 2. (Round your answers to the nearest whole ollar amount.) Note: The present value (PV) factor for N periods and rate r per period =1(1+r)N. For example, the PV factor for 10%,5 years =1(1+0.10)5=0.621 TARI .F. 2 Precent Value of Annuity of $1 Note: The present value (PV) annuity factor for N periods and a rate of r per period =[1(1+r)N]r. For example, for N=5 and r=0.10, the PV The Mendoza Company discussed in the chapter is now considering replacing a piece of equipment that the company uses to monitor the integrity of metal pipes used for deep-sea drilling purposes. The company's pre-tax WACC (discount rate) is estimated as 10%. The following data are pertinent to the question you've been asked to analyze: equired: What is the maximum amount of annual variable operating expenses, pretax, that would make this an attractive investment from a resent-value standpoint? In answering this question, use the appropriate PV factor(s) from Appendix C, Table 1 and the appropriate V annuity factor from Appendix C, Table 2. (Round your answer to the nearest whole dollar amount.) . Assume now that the company expects, over the coming 6 years, to be subject to a combined income tax rate of 35%, including any ain/loss realized on the sale of the existing equipment. Assume that the current net book value of the existing asset is $78,000 and lat the after-tax WACC (discount rate) for Mendoza is 8%. Finally, assume that the company will use straight-line depreciation, with no alvage value, for income tax purposes. In this situation, what is the maximum amount of variable operating costs (on both a pre-tax nd on an after-tax basis) that can be incurred in order to make the proposed purchase attractive in a present-value sense? In nswering this question, use the appropriate PV annuity factor from Appendix C, Table 2. (Round your answers to the nearest whole ollar amount.)
