A Canadian engineering company just bought a bending machine for $50,000. Its service life is 10 years, and afterwards its salvage value will be $2,000. Services provided by the machine are expected to bring $10,000 in annual revenues, and operating costs were estimated at $2,000 per year. Assume that the CCA rate is equal to the depreciation rate, the after-tax interest rate is 5% and the corporate tax rate is 30%. Calculate the present worth of
A Canadian engineering company just bought a bending machine for $50,000. Its service life is 10 years, and afterwards its salvage value will be $2,000. Services provided by the machine are expected to bring $10,000 in annual revenues, and operating costs were estimated at $2,000 per year. Assume that the CCA rate is equal to the depreciation rate, the after-tax interest rate is 5% and the corporate tax rate is 30%. Calculate the present worth of
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter17: Long-term Investment Analysis
Section: Chapter Questions
Problem 2E
Related questions
Question
Answer the given question with a proper explanation and step-by-step solution.
A Canadian engineering company just bought a bending machine for $50,000. Its service life is 10 years, and afterwards its salvage value will be $2,000. Services provided by the machine are expected to bring $10,000 in annual revenues, and operating costs were estimated at $2,000 per year. Assume that the CCA rate is equal to the
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning