the actual IRR on the incermental cash flows is? %
use those numbers now
In 2018, a certain manufacturing company has some existing semi-automated production equipment which they are considering replacing. This equipment has a present market value of $61,000 and a book value of $26,000. It has five more years of straight-line depreciation available if kept) of $5,200 per year, at which time its BV would be zero. The estimated market value of the equipment five years from now in year dollars) is $18,100. The market value escalation rate on this type of equipment has been averaging 3.1% per year. The total annual operating and maintenance (O&M) expense and other related expenses are averaging $26,700 per year. New automated replacement equipment would be leased. Estimated O 8 M and related company expenses for the new equipment are $12,500 per year. The annual leasing costs would be $22,700. The MARR (after-tax including inflation component) is 10%, the effective tax rate is 25%, and the study period is five years. Based on an after-tax, AS analysis, should the new equipment be leased? Use the IRR method. In 2018, a certain manufacturing company has some existing semi-automated production equipment which they are considering replacing. This equipment has a present market value of $59,000 and a book value of $28,000. It has five more years of straight-line depreciation available (if kept) of $5,600 per year, at which time its BV would be zero. The estimated market value of the equipment five years from now (in year 0 dollars) is $17,100. The market value escalation rate on this type of equipment has been averaging 3.4% per year. The total annual operating and maintenance (O&M) expense and other related expenses are averaging $26,100 per year. New automated replacement equipment would be leased. Estimated O & M and related company expenses for the new equipment are $12,200 per year. The annual leasing costs would be $22,700. The MARR (after-tax including inflation component) is 12%, the effective tax rate is 25%, and the study period is five years. Based on an after-tax, AS analysis, should the new equipment be leased? Use the IRR method In 2018, a certain manufacturing company has some existing semi-automated production equipment which they are considering replacing. This equipment has a present market value of $61,000 and a book value of $26,000. It has five more years of straight-line depreciation available if kept) of $5,200 per year, at which time its BV would be zero. The estimated market value of the equipment five years from now in year dollars) is $18,100. The market value escalation rate on this type of equipment has been averaging 3.1% per year. The total annual operating and maintenance (O&M) expense and other related expenses are averaging $26,700 per year. New automated replacement equipment would be leased. Estimated O 8 M and related company expenses for the new equipment are $12,500 per year. The annual leasing costs would be $22,700. The MARR (after-tax including inflation component) is 10%, the effective tax rate is 25%, and the study period is five years. Based on an after-tax, AS analysis, should the new equipment be leased? Use the IRR method. In 2018, a certain manufacturing company has some existing semi-automated production equipment which they are considering replacing. This equipment has a present market value of $59,000 and a book value of $28,000. It has five more years of straight-line depreciation available (if kept) of $5,600 per year, at which time its BV would be zero. The estimated market value of the equipment five years from now (in year 0 dollars) is $17,100. The market value escalation rate on this type of equipment has been averaging 3.4% per year. The total annual operating and maintenance (O&M) expense and other related expenses are averaging $26,100 per year. New automated replacement equipment would be leased. Estimated O & M and related company expenses for the new equipment are $12,200 per year. The annual leasing costs would be $22,700. The MARR (after-tax including inflation component) is 12%, the effective tax rate is 25%, and the study period is five years. Based on an after-tax, AS analysis, should the new equipment be leased? Use the IRR method
