The CFO of Acme Manufacturing is considering the purchase of a special diamond-tipped cutting tool. This tool has the following initial costs to put into service. Acme will use cash to pay for all of these expenses, some of which was borrowed on a long-term credit line with the local bank. The CFO has been directed by Acme to use the MACRS depreciation method with a GDS recovery period of 5 years. Assume the tool is sold in the fifth year for $24,500. Is this a good investment? Click the icon to view the additional data on the revenues, expenses, and interest rates. Click the icon to view the GDS Recovery Rates (rk). Click the icon to view the interest and annuity table for discrete compounding when the MARR is 8% per year. Complete the blank cells in the table below. (Round to the nearest dollar.) EOY Taxable Income, BTCF, $ Depreciation, $ $ Income Tax (24%), $ ATCF, $ 0 105000 105000 1 105,000 - 7,954 112954 2 105,000 114976 - 9,976 - 2394 107,394 3 105,000 141013 - 36013 - 8,643 113643 4 105,000 5 105,000 20696 84,304 - 20,233 125233 01 24,500 Purchase price Delivery charge Installation cost Employee training $320,000 $6,800 $22,000 $10,500 Increased annual revenue Increased annual expenses After-tax MARR Effective tax rate Sa price of the tool in yr. 5 Projected salvage value in yr. 5 $140,000 $35,000 8% 24% $24,500 $10,500 Year 2 3 4 5 co 7 GDS Recovery Rates (rk) for the Six Personal Property Classes Recovery Period (and Property Class) 3-year 5-year 7-year 10-yeara 15-yearb 0.3333 0.2000 0.1429 0.1000 0.0500 0.4445 0.3200 0.2449 0.1800 0.0950 0.1481 0.1920 0.1749 0.1440 0.0855 0.0741 0.1152 0.1249 0.1152 0.0770 0.1152 0.0893 0.0922 0.0693 0.0576 0.0892 0.0737 0.0623 0.0893 0.0655 0.0590 0.0446 0.0655 0.0590 0.0656 0.0591 0.0655 0.0590 0.0328 0.0591 0.0590 0.0591 0.0590 0.0591 0.0295 N 0 9 10 11 12 13 14 15 20-year 0.0375 0.0722 0.0668 0.0618 0.0571 0.0528 0.0489 0.0452 0.0447 0.0447 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0223 16 17 18 19 20 21 aThese rates are determined by applying the 200% DB method (with switchover to the SL method) to the recovery period with the half-year convention applied to the first and last years. Rates for each period must sum to 1.0000. "These rates are determined with the 150% DB method instead of the 200% DB method (with switchover to the SL method) and are rounded off to four decimal places. N 1 Discrete Compounding; i = 8% Single Payment Uniform Series Compound Compound Sinking Amount Present Amount Present Fund Factor Worth Factor Factor Worth Factor Factor To Find F To Find P To Find F To Find P To Find A Given P Given F Given A Given A Given F FIP PIF FIA PIA AIF 1.0800 0.9259 1.0000 0.9259 1.0000 1.1664 0.8573 2.0800 1.7833 0.4808 1.2597 0.7938 3.2464 2.5771 0.3080 1.3605 0.7350 4.5061 3.3121 0.2219 1.4693 0.6806 5.8666 3.9927 0.1705 1.5869 0.6302 7.3359 4.6229 0.1363 1.7138 0.5835 8.9228 5.2064 0.1121 1.8509 0.5403 10.6366 5.7466 0.0940 1.9990 0.5002 12.4876 6.2469 0.0801 2.1589 0.4632 14.4866 6.7101 0.0690 2 Capital Recovery Factor To Find A Given P AIP 1.0800 0.5608 0.3880 0.3019 0.2505 0.2163 0.1921 0.1740 0.1601 0.1490 3 4 5 6 7 8 9 10