A chemical project with a fixed capital investment without land of $200,000. The operation of the chemical project starts at the end of year 1 with 8-years of project lifetime. The estimated revenue per year is $90,000, the estimated cost of manufacture without depreciation over the project lifetime is $25,000/yr, and the taxation rate is 40%. a. Please determine the yearly depreciation values using the standard MACRS method assuming surplus value of $5,000. b. Please determine the net profit for operation year 1, 5, and 8.

A chemical project with a fixed capital investment without land of $200,000. The operation of the chemical project starts at the end of year 1 with 8-years of project lifetime. The estimated revenue per year is $90,000, the estimated cost of manufacture without depreciation over the project lifetime is $25,000/yr, and the taxation rate is 40%. a. Please determine the yearly depreciation values using the standard MACRS method assuming surplus value of $5,000. b. Please determine the net profit for operation year 1, 5, and 8.

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

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