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Please help me with this problem with NO EXCEL. Thank you very much and I will rate. In 2018, a certain manufacturing company has some
Please help me with this problem with NO EXCEL. Thank you very much and I will rate.
In 2018, a certain manufacturing company has some existing semi-automated production equipment which they are considering replacing. This equipment has a present market value of $62,000 and a book value of $34,000. It has five more years of straight-line depreciation available (if kept) of $6,800 per year, at which time its BV would be zero. The estimated market value of the equipment five years from now in year 0 dollars) is $17,300. The market value escalation rate on this type of equipment has been averaging 3.7% per year. The total annual operating and maintenance (O&M) expense and other related expenses are averaging $27,000 per year. New automated replacement equipment would be leased. Estimated O&M and related company expenses for the new equipment are $12,300 per year. The annual leasing costs would be $24,300. The MARR (after-tax including inflation component) is 6%, the effective tax rate is 25%, and the study period is five years. Based on an after-tax, A$ analysis, should the new equipment be leased? Use the IRR method. The actual IRR on the incremental cash flows is %. (Round to one decimal place.) The challenger should be accepted rejected Click to select your answer(s) and then click Check Answer. Clear All All parts showing Step by Step Solution
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