Question
Storage tanks to hold a highly corrosive chemical are currently made of material Z26. The capital investment in a tank is ?$32 comma 00032,000?, and
Storage tanks to hold a highly corrosive chemical are currently made of material Z26. The capital investment in a tank is
?$32 comma 00032,000?,
and its useful life is eight years. Your company manufactures electronic components and uses the ADS under MACRS to calculate depreciation deductions for these tanks. The net MV of the tanks at the end of their useful life is zero. When a tank is four years? old, it must be relined at a cost of
?$11 comma 00011,000.
This cost is not depreciated and can be claimed as an expense during year four.
Instead of purchasing the? tanks, they can be leased. A contract for up to 20 years of storage tank service can be written with the? Rent-All Company. If your? firm's after-tax MARR is
1010?%
per? year, what is the greatest annual amount that you can afford to pay for tank leasing without causing purchasing to be the more economical? alternative? Your? firm's effective income tax rate is
3939?%.
Problem 7-38 (algorithmic) Question H elp Storage tanks to hold a highly corrosive chemical are cumently made of material Z26. e capital investment in a tank is S32,000, and its useful life is eight years. our company manufactures electronic components and uses the ADS un MACRS to calculate depreciation deductions for these tanks. The net MV of the tanks at the end of their useful life is zero. When a tank is four years old, it must be relined at a cost of der $11,000. This cost is not depreciated and can be claimed as an expense during year tour. Instead of purchasing the tanks, they can be leased. A contra for up to 20 years of storage tank service can be written with the Rent-All Company. If your firm's after-tax MARR is 10% per year, what is the greatest annual amount that you can afford to pay for tank leasing without causing purchasing to be the more economical alternative? Your firm's effective income tax rate is 39%. Click the icon to view the partial listing of depreciable assets used in business. E Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year. The greatest annual amount that you can afford to pay is ound to the nearest dollar.) Enter your answer in the answer box and then click Check Answer. All parts showing Clear A CheckStep by Step Solution
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