A high-speed electronic assembly machine was purchased two years ago for $50,000. At the present time, it can be sold for $26,000 and replaced by a newer modelhaving a purchase price of $37,500; or it can be kept in service for a maximum of one more year. The new assembly machine, if purchased, has a useful life of notmore than two years. If the before-tax MARR is 12%, when should the old assembly machine be replaced? Use the following data table for your analysis.ChallengerDefenderO&M Costs$11,50013,000Year0Market Value$37,50031,0001226,000Click the icon to view the interest and annuity table for discrete compounding when the MARR is 12% per year.The minimum EUAC value of the challenger is $Market Value$26,00016,500(Round to the nearest dollar.)O&M Costs$15,500

In economics, the term "economic cost" has a broader meaning than simply the amount of money spent.…

Answered: A high-speed electronic assembly…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Similar questions

Twelve years ago, an industrial facility bought a boring machine for P65,000. The estimated life of this machine is25 years and a depreciation reserve had been placed based on this. The price of the latest model is P125,000 andthe facility owner wants to replace the machine with this latest model. The old unit can be sold for P18,000. Howmuch new capital will be required for the purchase?
Using the asset description and table below, find the economic service life (ESL) of the asset, assuming MARR = 8%. The company is committed to using the asset for the upcoming year, but is unsure about the following years. Today's market value is $70,000, and it will last another 4 years before failure. Each year, the after-tax market value decreases by $10,000. The operating cost of the asset in year 1 is expected to be $30,000, and it will increase by $5,000 each year through year 4. a. 3 yearsb. 1 yearc. 4 yearsd. 2 years
An industrial organization has established an automated assembly line (for $360,000) that will reduce labor costs by $56,000 each year for 10 years. The Internal Revenue Service has ruled that you must depreciate the assembly line on a Straight Line (SL) basis with a depreciable life of 10 years. After-tax MARR is 10% per year. The effective income tax rate is 25%. After 10 years, the machine will have zero salvage value. a) Draw a table showing Before Tax Cash Flow (BTCF) and After-Tax Cash Flow (ATCF). b) Calculate the after-tax PW and IRR. (Use interpolation method to find IRR). Is it feasible?
No handwritten please...
Certain new machinery used in manufacturing of motor vehicles, when placed in service, is estimated to cost $275,000. It is expected to reduce net annual operating expenses by $56,000 per year for 10 years and to have a $41,000 MV at the end of the 10th year. Assume that the firm is in the federal taxable income bracket of $335,000 to $10,000,000 and that the state income tax rate is 7.5%. State income taxes are deductible from federal taxable income. This machinery is to be depreciated using the MACRS (GDS). Develop the BTCFS and ATCFS and compute for the respective PWs at EOY O using an MARR of 12%. Cash Flow for Income Taxes ($) Before-Tax Cash Flow ΕΟΥ Depreciation ($) Taxable Income ($) After-Tax Cash Flow ($) ($) [1] 1 [2] 2 [3] [4] 4 [5] [6] [7] 9 [8] 10 [10] PW(0) using MARR [9] [11] Based on Before-Tax Analysis, is this machinery worth investing in? ("YES"/"NO"} [12] Based on After-Tax Analysis, is this machinery worth investing in? ["YES"/NO")
The Smith and Jones Research and Development firm has bought a new laboratory equipment (MACRS-GDS 3-year property class) to be used in a research project that will last 3 years. The cost of equipment is $750,000 but require bringing a technician to install the equipment and train the personal with an additional cost of $75,000. The equipment’s supplier will buy back the equipment at the end of the project for $50,000. The O&M costs per year incurred by the equipment are $70,000. The firm signed a contract with the DOD that states that they will receive a one lump-sum of $Y at the end of the life of the research project that will generate a rate of return of 8%. The firm will finance the equipment with a loan at 6% interest rate per year, and considering that the firm will not generate any revenue until the end of year 3, the bank has agreed that principal and accrued interests will be paid at the end of year three. Perform an ATCF analysis to determine the value of Y$ that will…
10.7 Determine the economic life of an $800 laptop computer. Your personal interest rate is 10% per year. Annual expenses and year-end resale values are expected to be the following: Year 1 Year 2 Year 3 Software upgrades and maintenance $150 $200 $300 Resale value at end of year $600 $450 $200
A small pump costs $24,000 and has a life of 8 years and a $1,400 SV at that time. If the 150% DB method is used to depreciate the pump, what is the BV at the end of year three? ..... Choose the correct answer below. O A. The BV at the end of year three is $13,624. B. The BV at the end of year three is $3,000. C. The BV at the end of year three is $4,558. D. The BV at the end of year three is $12,873.
The Shell Corporation has a 34% tax rate and owns a piece of petroleum-drilling equipment that costs $119,000 and will be depreciated at a CCA rate of 30%. Shell will lease the equipment to others and each year receive $33,100 in rent. At the end of five years, the firm will sell the equipment for $31,600. All values are presented in today's dollars. Calculate the overall present worth of these cash flows with tax effects if market interest rate is 10% and annual inflation rate is 2%. (Note: Don't use the $ sign in your answer and round it up to 2 decimal places)
REMOVE PERCENTAGE SIGN PRESENT 33.333333% AS 33.33
Question 2 With the estimates shown below, Sarah needs to determine the trade-in (replacement) value of machine X that will render its AW equal to that of machine Y at an interest rate of 10% per year. Determine the replacement value. Machine X Machine Y Market Value, $ ? 87,000 Annual Cost, $ per Year −58,000 −40,000 for year 1,increasing by 2000 per year thereafter. Salvage Value 16,500 21,000 Life, Years 3 5 The replacement value is $ . Full explain this question and text typing work only thanks
A company just bought a new piece of equipment for $4.919 million. The following information is given: - after-tax annual interest rate = 17.9% - corporate tax rate = 29% - service life = 24 years - depreciation rate = 20% Calculate the present worth of the equipment's salvage value with tax effects.

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