Answered step by step
Verified Expert Solution
Question
1 Approved Answer
you have to make a table with.. BTCF (Before tax cashflow), Depreciation, Tax income, Tax at rate, ATCF(After Tax Cashflow). then finally solve for PW
you have to make a table with.. BTCF (Before tax cashflow), Depreciation, Tax income, Tax at rate, ATCF(After Tax Cashflow). then finally solve for PW
all the data needed to answer the question is here. nothing is missing. if you dont know how solve it then dont.
A proposed project will provide the capability to produce a specialized product estimated to have a short market (sales) life. Based on an after-tax analysis using the PW method, what minimum amount of equivalent uniform annual revenue is required to justify the project economically? Capital investment is $1,040,000. (This includes land and working capital.) The cost of depreciable property, which is part of the $1,040,000 total estimated project cost, is $370,000. Assume, for simplicity, that the depreciable property is in the MACRS (GDS) three-year property class. The analysis period is three years. Annual operating and maintenance expenses are $604,000 in the first year, and they increase at the rate of 5% per year (i.e., f = 5%) thereafter. Estimated MV of depreciable property from the project at the end of three years is $340,000 Federal income tax rate = 23%, state income tax rate = 4%. MARR (after taxes) is 12% per year. Use the half-year time convention for depreciation in the last year. GDS Recovery Rates (rk) Year 3-year Property Class 0.3333 0.4445 0.1481 0.0741Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started