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please solve all 9 parts and highlight the Final answers A company is considering the purchase of a capital asset for 110,000 $. Installation charges
please solve all 9 parts and highlight the Final answers
A company is considenng the purchese of a captal asset for $110,000. instellation charpes needed to roaks the asset serviceable will total $35, Co0. The asset ail be dapreciated over six years using the straight-line method and an estrmated savage value (SV,) of 525,000 . The asset will be kept in service for sax years, ater which it will be scid for $30, 000 . During its useful life, it is 85 imated that the asset wil affer tax MARR is ifle and the effective tax rate o 25% a. Compute the after.tax cash foos b. Computh the after-tax present worth of fie pioject, sad use a unifomm gradent in wour formulation c. The before tax present worth of tris asset is - 519.147. By bow thuch would he antual cevenues have to increase to make the purchase of the asset justriable on a betcee tax basis? a. Calculale the after-tax cash forss and fit in the trible becow (Round to the neavest dohar) A company is considering the purchase of a capital asset for 110,000 $. Installation charges needed to make the asset serviceable will total 35,000$. The asset will be depreciated over six years using the straight-line method and an estimated salvage value (SV6) of 25,000$. The asset will be kept in service for six years, after which it will be sold for 30,000$. During its useful life, it is estimated that the asset will produce annual revenues of 35,000 $. Operating and maintenance (O&M) costs are estimated to be 7,000 $ in the first year. These O&M costs are projected to increase by 500 $ per year each year thereafter. The after tax MARR is 9% and the effective tax rate is 25%.
a. Compute the after-tax cash flows.
b. Compute the after-tax present worth of the project, and use a uniform gradient in your formulation.
c. The before-tax present worth of this asset is -19,147 $. By how much would the annual revenues have to increase to make the purchase of this asset justifiable on a before-tax basis?
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