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Pueblo Manufacturing Company is considering the purchase of equipment to expand its productive capacity. The equipment is expected to generate the following cash revenues and

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Pueblo Manufacturing Company is considering the purchase of equipment to expand its productive capacity. The equipment is expected to generate the following cash revenues and expenses over its useful life. PUEBLO MANUFACTURING COMPANY DATA FOR CAPITAL INVESTMENT ANALYSIS Cash Revenues Cash Expenses 30,000$ Year 1 20,000 22,000 2 40,000 3 50,000 25,000 4 40,000 30,000 20,000 20,000 5 The cost of the equipment is $60,000 and the equipment is expected to have a salvage value of $6,000. The company uses 200% (double) declining balance depreciation for all equipment. The company requires a minimum rate of return after tax of 11% and a maximum payback period of 4 years on its capital investment purchases. The company has a marginal tax rate of 30%. REQUIRED: (1) (2) What is the after tax accounting rate of return on this equipment? Round your answer to four decimal places. What is the after tax payback period on this equipment? Round your answer to two decimal places. What is the after tax net present value of this equipment? Round your answer to the nearest whole dollar. Should the company purchase the equipment? Explain. (4)

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