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Problem 4: Wilson Security has received a contract to provide additional security for corporate and government personnel along the Arizona-Mexico border. Wilson plans to
Problem 4: Wilson Security has received a contract to provide additional security for corporate and government personnel along the Arizona-Mexico border. Wilson plans to purchase listening and detection equipment for use in the 6-year contract. The equipment is expected to cost $600,000 and have a resale value of $200,000 after 6 years. Based on the incentive clause in the contract, Wilson estimates that the equipment will increase contract revenue by $200,000 per year and require an additional M&O expense of $100,000 per year. SOYD depreciation allows recovery in 6 years, and the effective corporate tax rate is 30% per year. Tabulate and plot the CFBT and CFAT series. Year 0 CFBT -600,000 1 2 3 4 5 6 6 200,000 DSOYD TI TX CFAT -600,000 200,000
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