Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please show work and fill out table 6) (28 points) A company is considering the purchase of a new automated machine to increase its production
please show work and fill out table
6) (28 points) A company is considering the purchase of a new automated machine to increase its production capacity. The initial cost of the machine is $576,000. It is expected to increase the company's annual revenue by $240,000. The annual O\&M costs are estimated to be $48,000. The machine's estimated salvage value at the end of its useful life of 4 years is expected be $86,400. This new machine is a MACRS-GDS 3-year property for calculating depreciation deductions. The effective tax rate is 35%. a) (20 points) For this new machine, determine the after-tax cash flow for each year of operation. (Round off values to the nearest dollar) \begin{tabular}{|c|l|l|l|l|l|} \hline EOY & BTCF & DeductionMACRS-GDS & IncomeTaxable & Tax & ATCF \\ \hline 0 & & & & & \\ \hline 1 & & & & & \\ \hline 2 & & & & & \\ \hline 3 & & & & & \\ \hline \end{tabular} b) (8 points) If the after-tax MARR is 10% per year compounded annually, compute the PW of the after-tax cash flows. Based on this PW, would you recommend the purchase of this new machine Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started