How much more can Belong Designs spend on a building in year 0 and still achieve a 10% Rate of Return? For simplicity, ignore the increase in salvage value and follow the same deduction schedule as the original building cost. Year Production 1,000 1,000 54.00 $ 1,000 54.00 $ (12.00) $ (10,000) S 1,000 54.00 S 1,000 54.00 54.00 $ Seling Price Operating Costs Per Unit (12.00) S (10,000) s (12.00) $ (10,000) S (12.00) S (10,000) S (12.00) Additional Operating Costs Sale Value of Bid & Land Equipment (10,000) 82,500 $ (20,000) 5-yr MACRS start in YR 1 $ 30,000) $ (45,000) 39 year start in 1 with a full year deduction Land Building Tax Rate 25% Year Cum. Gross Revenue 54,000 54,000 54,000 54,000 270,000 54,000 82,500 Sale Value 82,500 -Op. Cost /Unit Additional Op. Cost -Equipment Depr. Buikling Depre. Land Write Off (60,000) (12,000) (10,000) (4,000) (12,000) (10,000) (6,400) (1,154) (12,000) (10,000) (3,840) (12,000) (10,000) (2,304) (12,000) (10,000) (3,456) (40,385) (30,000) (50,000) (20,000) (45,000) (1,154) (1,154) (1,154) (30,000) 147,500 Taxable income 26,846 24,446 27,006 (6,752) 20,255 28,542 40,659 -Tax Net Income (6,712) (6,112) 18,335 6,400 (7,136) 21,407 2,304 1,154 (10,165) (36,875) 20,135 4,000 1,154 30,495 110,625 +Equipent Depr. *Building Depr. +Land Write Off 3,840 3,456 20,000 1,154 1,154 40,385 45,000 30,000 Capital Equipment Capital Buikding Capital tand After Tax Cash Flow (20,000) (45,000) (30,000) (95,000) 30,000 (20,000) (45,000) (30,000) 25,288 25,888 25,248 24,864 104,335 110,625 NPV @10% = 50,121 > 0, Accept