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 $60,000 with $4,500 salvage value after 16 years. The other can be purchased and installed for $120,000 with $4,000 salvage value after 16 years. Operation and maintenance for each is expected to be $21,000 and $18,000 per year, respectively. The granary uses MACRS-GDS depreciation, has a marginal tax rate of 25%, 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 Your answer is partially correct. Determine which alternative is less costly, based upon comparison of after-tax annual worth. Alternative 1 Show the AW values used to make your decision: Conveyor 1: $ 60000 Conveyor 2: $ Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±10.

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 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 $60,000 with $4,500 salvage value after 16 years. The other can be purchased and installed for $120,000
with $4,000 salvage value after 16 years. Operation and maintenance for each is expected to be $21,000 and $18,000 per year,
respectively. The granary uses MACRS-GDS depreciation, has a marginal tax rate of 25%, 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
Your answer is partially correct.
Determine which alternative is less costly, based upon comparison of after-tax annual worth.
Alternative 1
Show the AW values used to make your decision:
Conveyor 1: $
60000
Conveyor 2: $
Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±10.
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 $60,000 with $4,500 salvage value after 16 years. The other can be purchased and installed for $120,000 with $4,000 salvage value after 16 years. Operation and maintenance for each is expected to be $21,000 and $18,000 per year, respectively. The granary uses MACRS-GDS depreciation, has a marginal tax rate of 25%, 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 Your answer is partially correct. Determine which alternative is less costly, based upon comparison of after-tax annual worth. Alternative 1 Show the AW values used to make your decision: Conveyor 1: $ 60000 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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