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Your company manufactures circuit boards and other electronic parts for various commercial products. Design changes in part of the product line, which are expected to
Your company manufactures circuit boards and other electronic parts for various commercial products. Design changes in part of the product line, which are expected to increase sales, will require changes in the manufacturing operation. The cost basis of new equipment required is $MACRS fiveyear property class; GDS Increased annual revenues, in year zero dollars, are estimated to be $ Increased annual expenses, in year zero dollars, are estimated to be $ The estimated market value of equipment in actual dollars at the end of the sixyear analysis period is $ General price inflation is estimated at per year; the total increase rate of annual revenues is and for annual expenses it is ; the aftertax MARRin market terms is per year i Subscript m; and t
a Based on an aftertax, actualdollar analysis, what is the maximum amount that your company can afford to spend on the total projectie changing the manufacturing operations Use the PW method of analysis.
Fill in the following table. Express values in A$Round to the nearest dollar. The table has Year, and the ATCF for each.
b Calculate the PW
c What is the total investment that can be afforded $
d Developshow your ATCF in real dollars. The table has years and the ATCF for each.
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