Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Two investments involving a virtual mold apparatus for producing dental crowns qualify for different property classes. Investment A has a cost of $52,500, lasts 9

image text in transcribed
Two investments involving a virtual mold apparatus for producing dental crowns qualify for different property classes. Investment A has a cost of $52,500, lasts 9 years with no salvage value, and costs $150,000 per year in operating expenses. It is in the 3 year property class. Investment Bhas a cost of $79,000.00, lasts 9 years with no salvage value, and costs $125,000 per year. Investment B, however, is in the 7-year property class. The company marginal tax rate is 25%, and MARR is an after-tax 10%. a. Based upon the use of MACRS-GDS depreciation, compare the AW of each alternative. AWA-5 AW, - $ Which should be selected? (Investment A: Investment B) Investment B h. What must be investment B's cost of operating expenses for these two investments to be equivalent? Round your answer to 2 decimal places. The tolerance is 10. Two investments involving a virtual mold apparatus for producing dental crowns qualify for different property classes. Investment A has a cost of $52,500, lasts 9 years with no salvage value, and costs $150,000 per year in operating expenses. It is in the 3 year property class. Investment Bhas a cost of $79,000.00, lasts 9 years with no salvage value, and costs $125,000 per year. Investment B, however, is in the 7-year property class. The company marginal tax rate is 25%, and MARR is an after-tax 10%. a. Based upon the use of MACRS-GDS depreciation, compare the AW of each alternative. AWA-5 AW, - $ Which should be selected? (Investment A: Investment B) Investment B h. What must be investment B's cost of operating expenses for these two investments to be equivalent? Round your answer to 2 decimal places. The tolerance is 10

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Venture Capital And The Finance Of Innovation

Authors: Andrew Metrick, Ayako Yasuda

3rd Edition

1119490111, 978-1119490111

More Books

Students also viewed these Finance questions

Question

Did you offer hard data that is verifiable? [D]

Answered: 1 week ago