A granary has two options for a conveyor used in the manufacture of grain for transporting, filling, or emptying One conveyor can be purchased and installed for $90,000 with $2,500 salvage value after 16 years. The other can be purchased and installed for $130,000 with $5.500 salvage value after 16 years. Operation and maintenance for each is expected to be $14,000 and $15,000 per year, respectively. The granary uses MACRS-GDS depreciation, has a marginal tax rate of 40%, and has a MARR of 9% after taxes. Click here to access the TVM Factor Table Calculator Click here to access the MACRS-GDS table. Parta Determine which alternative is less costly, based upon comparison of after-tax annual worth Show the AW values used to make your decision: Conveyor 1:$ Conveyor 2:$ The tolerance is
A granary has two options for a conveyor used in the manufacture of grain for transporting, filling, or emptying One conveyor can be purchased and installed for $90,000 with $2,500 salvage value after 16 years. The other can be purchased and installed for $130,000 with $5.500 salvage value after 16 years. Operation and maintenance for each is expected to be $14,000 and $15,000 per year, respectively. The granary uses MACRS-GDS depreciation, has a marginal tax rate of 40%, and has a MARR of 9% after taxes. Click here to access the TVM Factor Table Calculator Click here to access the MACRS-GDS table. Parta Determine which alternative is less costly, based upon comparison of after-tax annual worth Show the AW values used to make your decision: Conveyor 1:$ Conveyor 2:$ The tolerance is
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
Problem 1PS
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Transcribed Image Text:A granary has two options for a conveyor used in the manufacture of grain for transporting, filling, or emptying. One conveyor can be
purchased and installed for $90,000 with $2,500 salvage value after 16 years. The other can be purchased and installed for $130,000
with $5,500 salvage value after 16 years. Operation and maintenance for each is expected to be $14,000 and $15,000 per year,
respectively. The granary uses MACRS-GDS depreciation, has a marginal tax rate of 40%, and has a MARR of 9% after taxes.
Click here to access the TVM Factor Table Calculator
Click here to access the MACRS-GDS table.
Part a
Determine which alternative is less costly, based upon comparison of after-tax annual worth.
Show the AW values used to make your decision:
Conveyor 1:$
Conveyor 2: $
Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is
+10.
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