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Please No Excel, Show work 2 (15 pts) Alpha Semiconductor Co. is evaluating whether to add another IC production line. The line would cost $80000
Please No Excel, Show work
2 (15 pts) Alpha Semiconductor Co. is evaluating whether to add another IC production line. The line would cost $80000 and would have no market value at the end of its 7 year life. The facility would be depreciated using straight line depreciation. Gross income (GI) and annual operating costs (AOC) are expected to be $20000 and $6400 in year 1, respectively. GI and AOC are expected to increase by $800 per year for the next 6 years. The company's effective tax rate is 40% and it uses an after-tax MARR of 15%. After 7 years, the line is actually sold for $40000. Is it worthwhile to invest? D= Year P GI E CFBT D DR CG CL TI T CFAT 0 1 2 4 5 6 7 Disposal Analysis: CG(7) DR (7) CL(7) Please show your work in details for the following: CFBT(7)- TI(7)- T(7)- CFAT(7)Step by Step Solution
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