7 A firm must decide between two designs. Their effective income tax rate is 22%, and MACRS depreciation is used. If the desired after-tax return on investment is 9% per year, which design should be chosen?Design A$1,050,000$950,000$210,000Design BCapital investment$1,970,000$1,100,000$390,0005 yearsMV at end of useful lifeAnnual revenues less expensesMACRS property class5 yearsUseful life7 years6 yearsE Click the icon to view the GDS Recovery Rates (r) for the 5-year property class.Click the icon to view the interest and annuity table for discrete compounding when the MARR is 9% per year.Calculate the AW value for the Design A.AWA (9%) = S (Round to the nearest dollar.)Calculate the AW value for the Design B.AWg (9%) = S(Round to the nearest dollar.)Based on the AW values,should be chosen.

The annual worth is calculated using the following formula:- Annual Worth (AW )=NPVPVAF(r%,n) Step…

A firm must decide between two designs. Their effective income tax rate is 22%, and MACRS depreciation is used. If the desired after-tax return on investment is 9% per year, which design should be chosen? Capital investment MV at end of useful life Annual revenues less expenses Design A $1,050,000 Design B $1,970,000 $1,100,000 $950,000 $210,000 5 years 7 years $390,000 5 years 6 years MACRS property class Useful life Click the icon to view the GDS Recovery Rates (r,) for the 5-year property class. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 9% per year. Calculate the AW value for the Design A. AWA (9%) = S (Round to the nearest dollar.) Calçulate the AW value for the Design B. AWa (9%) = S (Round to the nearest dollar.) Based on the AW values, V should be chosen.

A firm must decide between two designs. Their effective income tax rate is 22%, and MACRS depreciation is used. If the desired after-tax return on investment is 9% per year, which design should be chosen? Capital investment MV at end of useful life Annual revenues less expenses Design A $1,050,000 Design B $1,970,000 $1,100,000 $950,000 $210,000 5 years 7 years $390,000 5 years 6 years MACRS property class Useful life Click the icon to view the GDS Recovery Rates (r,) for the 5-year property class. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 9% per year. Calculate the AW value for the Design A. AWA (9%) = S (Round to the nearest dollar.) Calçulate the AW value for the Design B. AWa (9%) = S (Round to the nearest dollar.) Based on the AW values, V should be chosen.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

8. JOURANLIZE THE ADJUSTING ENTRIES
Section 1250 summary
two questions
E12.17
88 MULTIPLE CHOICE Question 6 Listen If f(x)= and g(x) = x²-16, then what is the value of f(g(4))? A 0 B 4 C undefined
LO 7.4 Name the four main special journals.
it say 1.33 is incorrect
Need help
Problem 9-25 Fudge factors An oil company executive is considering investing $10.1 million in one or both of two wells: well 1 is expected to produce oil worth $3.01 million a year for 10 years; well 2 is expected to produce $2.01 million for 15 years. These are real (inflation-adjusted) cash flows. The beta for producing wells is 0.91. The market risk premium is 9%, the nominal risk-free interest rate is 7%, and expected inflation is 3%. The two wells are intended to develop a previously discovered oil field. Unfortunately there is still a 21% chance of a dry hole in each case. A dry hole means zero cash flows and a complete loss of the $10.1 million investment. Ignore taxes and make further assumptions as necessary. a. What is the correct real discount rate for cash flows from developed wells? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Real discount rate b. The oil company executive proposes to add 20 percentage points to the…
Answer Question 4
I, J, K
D nctions Question 10 Use the diagram below to find each of the following: sine of point a • cose of point b • tane of point c d e