5tseBookHintPrintferencesProblem 17.049: Calculate the after-tax AW of two alternativesA European candy manufacturing plant manager must select a new irradiation system to ensure the safety of specific ingredients,while being economical. The two alternatives available have the following estimates:SystemFirst Cost, $CFBT, $ per YearLife, YearsA-150,00060,0003B-80,00020,0005Check my wThe company is in the 35% tax bracket and assumes classical straight line depreciation for alternative comparisons performed at anafter-tax minimum acceptable rate of return (MARR) of 8% per year. A salvage value of zero is used when depreciation is calculated;however, system B can be sold after 5 years for an estimated 8% of its first cost. System A has no anticipated salvage value. Determinewhich is more economical using an annual worth (AW) analysis worked by hand.The annual worth analysis for system A is determined to be $The annual worth analysis for system B is determined to be $System (Click to select) is selected.

Cost is the amount of money that is paid in the production process on rent, wages, interest, and…

Answered: A European candy manufacturing plant…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

A European candy manufacturing plant manager must select a new irradiation system to ensure the safety of specific ingredients, while being economical. The two alternatives available have the following estimates: System A B First Cost, $ –110,000 –85,000 CFBT, $ per Year 60,000 20,000 Life, Years 3 5 The company is in the 35% tax bracket and assumes classical straight line depreciation for alternative comparisons performed at an after-tax minimum acceptable rate of return (MARR) of 6% per year. A salvage value of zero is used when depreciation is calculated; however, system B can be sold after 5 years for an estimated 18% of its first cost. System A has no anticipated salvage value. Determine which is more economical using an annual worth (AW) analysis worked by hand. The annual worth analysis for system A is determined to be $ . The annual worth analysis for system B is determined to be $ .
Consider the following financial information for an engineer: Age: 25Status: Single, no childrenGross Income: $54,000 401k investment: $4000Residential status: RentingTotal eligible itemized deductions: $3000 for charitable donations What is the taxable income? (IF you need to use them, assume the standard deduction for single is $12000 and married is $24000).
Two parts to the question have been attached.
VML Industries has need of specialized yarn manufacturing equipment for operations over the next 3 years. The firm could buy the machinery for $95,000 and depreciate it using MACRS (this is a 7-year property). Annual maintenance would be $7500, and it would have a salvage value of $25,000 after 3 years. Another alternative would be to lease the same machine for $45,000 per year on an "all costs" inclusive lease (maintenance costs included in lease payment). These lease payments are due at the beginning of each year. VML Industries uses an after-tax MARR of 18% and a combined tax rate of 48%. Do an after-tax present worth analysis to determine which option is preferred.
Equipment associated with manufacturing small railcars had a first cost of $190000 with an expected salvage value of $30,000 at the end of its 5-year life. The revenue was $642000 in year 2, with operating expenses of $98,000. If the company's effective tax rate was 31.00%, what would be the difference in taxes paid in year 2 if the depreciation method were straight line instead of Modified Accelerated Cost Recovery System (MACRS)? The MACRS depreciation rate for year 2 is 32%. The difference in taxes paid is determined to be $
Required information Nuclear safety devices installed several years ago have been depreciated from a first cost of $200,000 to zero using the Modified Accelerated Cost Recovery System (MACRS). The devices can be sold on the used equipment market for an estimated $15,000, or they can be retained in service for 5 more years with a $9000 upgrade now and an operating expenses (OE) of $6000 per year. The upgrade investment will be depreciated over 3 years with no salvage value. The challenger is a replacement with newer technology at a first cost of $40,000, n = 5 years, and S= 0. The new units will have operating expenses of $7000 per year. Use a 5-year study period, an effective tax rate of 39%, an after-tax minimum acceptable rate of return (MARR) of 17% per year, and an assumption of classical straight line depreciation (no half-year convention) to perform an after-tax AW-based replacement study. Loe anfaat wordt The annual worth of the challenger is determined to be $ Since the annual…
Pertinent information for two alternatives A and B is shown below. If i-10%/year and the effective income tax rate is 35%, answer the following true/false questions. Alt. A Alt.B Basis, $ 150,000 225,,000 Gross Income (GI), $ 100,000 100,000 Operating Expense (OE), $ 30,000 10,000 Salvage Value, $ 15,000 22,500 MARCS Recovery, Years The CFAT at the end of year 5 for Alt. A is greater than $50,000. O True O False
A vehicle include annual labor cost of $60,000 and annual revenue of $150,000. Using a service life of 10 years, determine the BTCF and ATCF at 21% federal and 6.5% state tax rate. Would you invest in your vehicle? (Establish and use your own MARR for PW, AW and ROR analysis)
quipment associated with manufacturing small railcars had a first cost of $170,000 with an expected salvage value of $30,000 at the end of its 5-year life. The revenue was $630,000 in year 2, with operating expenses of $98,000. If the company’s effective tax rate was 36%, what would be the difference in taxes paid in year 2 if the depreciation method were straight line instead of Modified Accelerated Cost Recovery System (MACRS)? The MACRS depreciation rate for year 2 is 32%. The difference in taxes paid is determined to be $ .
N7
Eads Industrial Systems Company (EISC) is trying to decide between two different conveyor belt systems. System A costs $427,000, has a 6-year life, and requires $115,000 in pretax annual operating costs. System B costs $502,000, has an 8-year life, and requires $79,000 in pretax annual operating costs. Both systems are to be depreciated straight-line to zero over their lives and will have a zero salvage value. Whichever system is chosen, it will not be replaced when it wears out. The tax rate is 33 percent and the discount rate is 24 percent. Which system should the firm choose and why? a.No option is correct b.System A because its net present value is -$588,792 c.System B because its net present value is -$612,240 d.System A because its net present value is $211,516
Updated class practice problem to include state tax and proper consideration of asset disposal (1/2 depreciation and need BV to determine recapture or loss) GIVENS: Initial Cost $150,000 Annual net saving $50,000 state Useful life 6 years federal 6.50% 21.0% Salvage value $30,000 tax rate BTCF-D TI tax rate BTCF-Income Tax Year Taxable BTCF MACRS Depreciation Income Income Tax ATCF 0 ($150,000) ($150,000) 1 50,000 20% ($30,000) $20,000 $4,618 45,382 2 50,000 32% ($48,000) $2,000 $462 49,538 3 50,000 19.20% ($28,800) $21,200 $4,895 45,105 4 50,000 11.52% ($17,280) $32,720 $7,555 42,445 5 50,000 11.52% ($17,280) $32,720 $7,555 42,445 6 50,000 2.88% ($4,320) $45,680 $10,548 63,523 indudes 6 and disposal disposal 30,000 BV= $4,320 $25,680 $5,930 recapture ROR Question 1 What is the ATCF ROR when state taxes and asset disposal are properly considered?

SEE MORE QUESTIONS

Recommended textbooks for you

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

Principles of Economics (MindTap Course List)

Economics

ISBN:

9781305585126

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Managerial Economics: A Problem Solving Approach

Economics

ISBN:

9781337106665

Author:

Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:

Cengage Learning

Managerial Economics & Business Strategy (Mcgraw-…

Economics

ISBN:

9781259290619

Author:

Michael Baye, Jeff Prince

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS