question 2

Assignment 5 Problem 2 What is the aftertax present worth of a photocopier if it costs $11,100 and saves 52,500 per year in outsourced printing costs? Assume the copier will be worth $0 at the end of 6years. assume the company buying the copier is NOT in lCanada but in a country that uses straightline depreciation and has a corporate tax rate of 40%. The country does NOT use the Piyearruie. The aftertax Mt is 10%. Based on this analysis, is the photocopier a wise purchase? Assignment 5 - Problem 3 A Canadian company is considering the purchase of a $4,000 machine for their shop. The machine belongs to an asset Class with d = 0.20. The machine is expected to save $850 per year over its 10year life, 1with no scrap value. The company's tax rate is 45% and its after-tax MRR is 15%. Find the aftertax PW of the machine; should the company purchase it? (Hint: Use CTF to moire the probiern eosier there is no CSF since the scrap voiue is zero}I