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please solve Problem 7-26 (algorithmic) An assembly operation at a software company currently requires $94.000 per year in labor costs. A robot can be purchased
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Problem 7-26 (algorithmic) An assembly operation at a software company currently requires $94.000 per year in labor costs. A robot can be purchased and installed to automate this operation, and the robot will cost $190,000 with no MV at the end of its 10-year life. The robot, If acquired, will be depreciated using SL depreciation to a terminal BV of zero after 10 years. Maintenance and operation expenses of the robot are estimated to be $62,000 per year The company has an effective income tax rate of 25%, Invested capital must earn at least 10% after income taxes are taken into account a. Use the IRR method to determine if the robot is a justifiable investment b. I MACRS (seven-year recovery period) had been used in Part (a), would the after-tax IRR be lower or higher than your answer to Part (a)? Click the icon to view the GDS Recovery Rates (r) for the 7-year property class. a. The after tax IRR under the SL method is % (Round to one decimal place.) Problem 7-26 (algorithmic) An assembly operation at a software company currently requires $94.000 per year in labor costs. A robot can be purchased and installed to automate this operation, and the robot will cost $190,000 with no MV at the end of its 10-year life. The robot, If acquired, will be depreciated using SL depreciation to a terminal BV of zero after 10 years. Maintenance and operation expenses of the robot are estimated to be $62,000 per year The company has an effective income tax rate of 25%, Invested capital must earn at least 10% after income taxes are taken into account a. Use the IRR method to determine if the robot is a justifiable investment b. I MACRS (seven-year recovery period) had been used in Part (a), would the after-tax IRR be lower or higher than your answer to Part (a)? Click the icon to view the GDS Recovery Rates (r) for the 7-year property class. a. The after tax IRR under the SL method is % (Round to one decimal place.)Step by Step Solution
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