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 $20,000. Is this a good investment? More Info 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 10% per year. Complete the blank cells in the table below. (Round to the nearest dollar.) X EOY Year Taxable income, Depreciation, $ 5-yeara BTCF, $ Income Tax (24%), $ ATCF, 0 1 90.000 - 4,080 2 - 26,800 96.432 90,000 90,000 3 - 4,781 4 5 GDS Recovery Rates (r) for the Six Personal Property Classes Recovery Period (and Property Class) 3-year 7-year 10-year 15-year 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 90,000 90,000 20,000 68,976 - 16,554 5 Discrete Compounding; i = 10% 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 1.1000 0.9091 1.0000 0.9091 1.0000 1.2100 0.8264 2.1000 1.7355 0.4762 1.3310 0.7513 3.3100 2.4869 0.3021 1.4641 0.6830 4.6410 3.1699 0.2155 1.6105 0.6209 6.1051 3.7908 0.1638 1.7716 0.5645 7.7156 4.3553 0.1296 1.9487 0.5132 9.4872 4.8684 0.1054 2.1436 0.4665 11.4359 5.3349 0.0874 2.3579 0.4241 13.5795 5.7590 0.0736 2.5937 0.3855 15.9374 6.1446 0.0627 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Capital Recovery Factor To Find A Given P AIP 1.1000 0.5762 0.4021 0.3155 0.2638 0.2296 0.2054 0.1874 0.1736 0.1627 More Info Purchase price Delivery charge Installation cost Employee training $320,000 $6.000 $29,000 $10,000 These rates are determined by applying the 200% DB method (with switchover to the SL method period with the half-year convention applied to the first and last years. Rates for each period must Print Done Increased annual revenue Increased annual expenses After-tax MARR Effective tax rate Sales price of the tool in yr. 5 Projected salvage value in yr. 5 $120,000 $30,000 10% 24% $20,000 $10,000 Print Done 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 $20,000. Is this a good investment? More Info 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 10% per year. Complete the blank cells in the table below. (Round to the nearest dollar.) X EOY Year Taxable income, Depreciation, $ 5-yeara BTCF, $ Income Tax (24%), $ ATCF, 0 1 90.000 - 4,080 2 - 26,800 96.432 90,000 90,000 3 - 4,781 4 5 GDS Recovery Rates (r) for the Six Personal Property Classes Recovery Period (and Property Class) 3-year 7-year 10-year 15-year 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 90,000 90,000 20,000 68,976 - 16,554 5 Discrete Compounding; i = 10% 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 1.1000 0.9091 1.0000 0.9091 1.0000 1.2100 0.8264 2.1000 1.7355 0.4762 1.3310 0.7513 3.3100 2.4869 0.3021 1.4641 0.6830 4.6410 3.1699 0.2155 1.6105 0.6209 6.1051 3.7908 0.1638 1.7716 0.5645 7.7156 4.3553 0.1296 1.9487 0.5132 9.4872 4.8684 0.1054 2.1436 0.4665 11.4359 5.3349 0.0874 2.3579 0.4241 13.5795 5.7590 0.0736 2.5937 0.3855 15.9374 6.1446 0.0627 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Capital Recovery Factor To Find A Given P AIP 1.1000 0.5762 0.4021 0.3155 0.2638 0.2296 0.2054 0.1874 0.1736 0.1627 More Info Purchase price Delivery charge Installation cost Employee training $320,000 $6.000 $29,000 $10,000 These rates are determined by applying the 200% DB method (with switchover to the SL method period with the half-year convention applied to the first and last years. Rates for each period must Print Done Increased annual revenue Increased annual expenses After-tax MARR Effective tax rate Sales price of the tool in yr. 5 Projected salvage value in yr. 5 $120,000 $30,000 10% 24% $20,000 $10,000 Print Done