Richard Casablancas must build a path to maintain his access to the ocean. The path could be fabricated from normal wood for an initial cost of $20,000 and should last for 8 years. Maintenance will cost $1,500 per year. Another option would be to use weather-treated wood, which will last for 8 years, with annual maintenance cost of $500. In 8 years there would be no salvage value for either path. Casablancas pays combined federal and state taxes at the 40% effective rate and uses straight-line depreciation. If the after-tax MARR is 10%, what is the maximum initial cost that should be spent on the weather-treated path? Question 5. Part A: Select the appropriate representation of the ATCE of the normal wood path in every year past year 0. Hint: Setting up a table may be helpful in determining an answer. 0-600 + (8000/8) O-1500 + 600 + (8000/8) 0 -1500 + 600 0 -1500 - 2500 Question 5, Part B: Select the appropriate equation to represent the NPW of the normal wood path. 1600(P/A 10%, 8) O 20000 - 100 (P/A, 10%, 8) O-20000 + 100 (P/A, 10%, 8) O-1600(P/A 10%, 8) Question 5, Part C: Provide the after-tax NPW of the normal wood path. Provide your answer in the form: 123456.78 Question 5, Part D: Select the appropriate representation of the ATCF of the weather resistant wood path in every year past year 0. Hint: Setting up a table may be helpful in determining an answer. O-500 - (-200) - (-1/20)"Initial Cost) O-200 + 1/20"(Initial Cost) -1500 - (Initial Cost/8 O-500 - (-200) Question 5. Part E: Provide the maximum initial cost that should be spent on the weather resistant path. Provide your answer in the form: 123456.78 Richard Casablancas must build a path to maintain his access to the ocean. The path could be fabricated from normal wood for an initial cost of $20,000 and should last for 8 years. Maintenance will cost $1,500 per year. Another option would be to use weather-treated wood, which will last for 8 years, with annual maintenance cost of $500. In 8 years there would be no salvage value for either path. Casablancas pays combined federal and state taxes at the 40% effective rate and uses straight-line depreciation. If the after-tax MARR is 10%, what is the maximum initial cost that should be spent on the weather-treated path? Question 5. Part A: Select the appropriate representation of the ATCE of the normal wood path in every year past year 0. Hint: Setting up a table may be helpful in determining an answer. 0-600 + (8000/8) O-1500 + 600 + (8000/8) 0 -1500 + 600 0 -1500 - 2500 Question 5, Part B: Select the appropriate equation to represent the NPW of the normal wood path. 1600(P/A 10%, 8) O 20000 - 100 (P/A, 10%, 8) O-20000 + 100 (P/A, 10%, 8) O-1600(P/A 10%, 8) Question 5, Part C: Provide the after-tax NPW of the normal wood path. Provide your answer in the form: 123456.78 Question 5, Part D: Select the appropriate representation of the ATCF of the weather resistant wood path in every year past year 0. Hint: Setting up a table may be helpful in determining an answer. O-500 - (-200) - (-1/20)"Initial Cost) O-200 + 1/20"(Initial Cost) -1500 - (Initial Cost/8 O-500 - (-200) Question 5. Part E: Provide the maximum initial cost that should be spent on the weather resistant path. Provide your answer in the form: 123456.78
