Raytheon wishes to use an automated environmental chamber in the manufacture of electronic components. The chamber is to be used for rigorous reliability testing and burn-in. It is installed for $700,000, $300,000 of which is borrowed at 11% for 5 years, and will have a salvage value of $150,000 after 8 years. Its use will create an opportunity to increase sales by $650,000 per year and will have operating expenses of $250,000 per year. Corporate income taxes are 40%. Develop tables using a spreadsheet to determine the ATCF for each year and the after-tax Pw, Aw, IRR, and ERR, if the chamber is kept for 8 years. After-tax MARR is 10%. Determine for each year the ATCF and the PW, FW, AW, IRR, and ERR for the investment if: Click here to access the TVM Factor Table Calculator Click here to access the MACRS-GDS table straight-line depreciation is used over 8 years with no half-year convention and the loan is paid back using Method 1 (interest only at the end of each year of the loan, plus principal at the end of the last year). End of Year ATCF AW: $ For dollar amounts, carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is 50. IRR: straight-line depreciation is used over 8 years with no half-year convention and the loan is paid back using Method 2 (equal annual principal payments plus interest on the unpaid loan balance) End of Year ATCF PW: $ FW: $ AW:$ For dollar amounts, carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ts0. IRR: ERR: For rates, carry all interim calculations to 5 decimal places and then round your final answer to 1 decimal place. The tolerance is t0.2. straight-line depreciation is used over 8 years with no half-year convention and the loan is paid back using Method 3 (equal annual principal plus interest payments during each year of the loan) ATCF End of Year PW: $ FW: $ AW: $ For dollar amounts, carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is 50. IRR: ERR: MACRS-GDS depreciation is used with the appropriate property dass and the loan is paid back using Method 1 (interest only at the end of each year of the loan, plus principal at the end of the last year) End of Year ATCF SL PW: $ AW: $ For dollar amounts, carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is 50. IRR 1% ERR: For rates, carry all interim calculations to 5 decimal places and then round your final answer to 1 decimal place. The tolerance is 0.2 MACRS-GDS depreciation is used with the appropriate property class and the loan is paid back using Method 2 (equal annual principal payments plus interest on the unpaid loan balance) End of Year ATCF PW: $ For dollar amounts, carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is +50. IRR: ERR For rates, carry all interim calculations to 5 decimal places and then round your final answer to 1 decimal place. The tolerance is 0.2. MACRS-GDS depreciation is used with the appropriate property class and the loan is paid back using Method 3 (equal annual principal plus interest payments during each year of the loan). ATCF End of Year PW: $ 1717: AW:$ For dollar amounts, carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is so. IRR: ERR: For rates, carry all interim calculations to 5 decimal places and then round your final answer to 1 decimal place. The tolerance is 0.2
