Problem 7-22 (algorithmic) Question Help 0 A company is considering the purchase of a capital asset for $120,000. Installation charges needed to make the asset serviceable will total $25,000. The asset will be depreciated over six years using the straight-line method and an estimated salvage value (SVO) of $16,000. The asset will be kept in service for six years, after which it will be sold for $26,000. During its useful life, it is estimated that the asset will produce annual revenues of $25,000. Operating and maintenance (O&M) costs are estimated to be $6,000 in the first year. These O&M costs are projected to increase by $1,500 per year each year thereafter. The after tax MARR is 15% 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 - $82,979. By how much would the annual revenues have to increase to make the purchase of this asset justifiable on a before-tax basis? 5 Click the icon to view the interest and annuity table for discrete compounding when the MARR is 15% per year. Problem 7-22 (algorithmic) Question Help 0 A company is considering the purchase of a capital asset for $120,000. Installation charges needed to make the asset serviceable will total $25,000. The asset will be depreciated over six years using the straight-line method and an estimated salvage value (SVO) of $16,000. The asset will be kept in service for six years, after which it will be sold for $26,000. During its useful life, it is estimated that the asset will produce annual revenues of $25,000. Operating and maintenance (O&M) costs are estimated to be $6,000 in the first year. These O&M costs are projected to increase by $1,500 per year each year thereafter. The after tax MARR is 15% 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 - $82,979. By how much would the annual revenues have to increase to make the purchase of this asset justifiable on a before-tax basis? 5 Click the icon to view the interest and annuity table for discrete compounding when the MARR is 15% per year