A contractor is considering the purchase of a setof machine tools at a cost of $50,000. Thepurchase is expected to generate profits of$19,000 (revenues less expenses) per year ineach of the next 4 years Additional profits will betaxed at a rate of 40%. The asset is depreciatedby straight-line method with zero salvage value.The contractor's real after-tax MARR is 10%(25%)1). What is the PW of this investment? Should thecontractor purchase the machine tools?2). What is the PW of this investment if the generalinflation is 3% in the 4 year period? Should thecontractor purchase the machine tools?

Present worth represent the value of asset or any goods and services after the depreciation and the…

A contractor is considering the purchase of a set of machine tools at a cost of $50,000. The purchase is expected to generate profits of $19,000 (revenues less expenses) per year in each of the next 4 years Additional profits will be taxed at a rate of 40%. The asset is depreciated

A contractor is considering the purchase of a set of machine tools at a cost of $50,000. The purchase is expected to generate profits of $19,000 (revenues less expenses) per year in each of the next 4 years Additional profits will be taxed at a rate of 40%. The asset is depreciated

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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