The Company is considering the purchase of a flow measurement device. Its purchase price is $12.000 and another $600 will be spent shipping and installing the device. Use of the device is expected to result in an $8.000 annual increase in revenue, operating expenses are estimated to be $3,000 per year. The meter will be used for five years, then it will be sold for an estimated market value of $3.000. The meter's MACRS property c is five years.

If the effective income tax rate (t) is 40%. If after-tax MRR is 10%.

(should a flow measuring device be purchased, installed, and utilized by the company?

(What is the discounted payback period based on after-tax cash flow?

If the inflation rate is 5% per year, check if purchasing the device is profitable by using PW for the real dollar.
EOY
BTCF

MACRS

Factor

Depreciation Taxable

Income

Income

Tax

ATCF