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A firm must decide between two silicon layer chip designs from Intel. Their effective income tax rate is 24%, and MACR depreciation is used. If the desired after-tax return on investment is 12% per year, which design should be chosen? Design A $1,140,000 $960,000 Design B $1,810,000 $1,110,000 Capital investment MV at end of useful life Annual revenues less $250,000 $370,000 expenses MACRS property class 5 years 7 years 5 years Useful life 6 years Click the icon to view the GDS Recovery Rates (r,) for the 5-year property class. ..... Calculate the AW value for the Design A. AWA(12%) = S (Round to the nearest dollar.) Calculate the AW value for the Design B. AWg(12%) = S (Round to the nearest dollar.) Based on the AW values, should be chosen.

A firm must decide between two silicon layer chip designs from Intel. Their effective income tax rate is 24%, and MACR depreciation is used. If the desired after-tax return on investment is 12% per year, which design should be chosen? Design A $1,140,000 $960,000 Design B $1,810,000 $1,110,000 Capital investment MV at end of useful life Annual revenues less $250,000 $370,000 expenses MACRS property class 5 years 7 years 5 years Useful life 6 years Click the icon to view the GDS Recovery Rates (r,) for the 5-year property class. ..... Calculate the AW value for the Design A. AWA(12%) = S (Round to the nearest dollar.) Calculate the AW value for the Design B. AWg(12%) = S (Round to the nearest dollar.) Based on the AW values, should be chosen.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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A firm must decide between two silicon layer chip designs from Intel. Their effective income tax rate is 24%, and MACRS depreciation is used. If the desired after-tax return on investment is 12% per year, which design should be chosen? Design A Design B $1,140,000 $960,000 $1,810,000 $1,110,000 Capital investment MV at end of useful life Annual revenues less $250,000 $370,000 expenses 5 years 7 years 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. ..... Calculate the AW value for the Design A. AWA(12%) = $| (Round to the nearest dollar.) Calculate the AW value for the Design B. AWR(12%) = S (Round to the nearest dollar.) Based on the AW values, should be chosen.
Transcribed Image Text:A firm must decide between two silicon layer chip designs from Intel. Their effective income tax rate is 24%, and MACRS depreciation is used. If the desired after-tax return on investment is 12% per year, which design should be chosen? Design A Design B $1,140,000 $960,000 $1,810,000 $1,110,000 Capital investment MV at end of useful life Annual revenues less $250,000 $370,000 expenses 5 years 7 years 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. ..... Calculate the AW value for the Design A. AWA(12%) = $| (Round to the nearest dollar.) Calculate the AW value for the Design B. AWR(12%) = S (Round to the nearest dollar.) Based on the AW values, should be chosen.
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