A large company is planning to purchase equipment costing $220,000 and will depreciate it fully using straight-line depreciation over 8 years. The company expects that the investmentwill have an annual benefit of $54,000. Each use of the equipment will also provide a benefit of $25. In 5 years, there will be no salvage value for the equipment. The company'scombined marginal tax rate is 24%. Based on 12% after-tax MARR, how many uses of the equipment must the company have each year in order to justify its investment?Question 8 Part A: Choose the correct Before Tax Cash Flow Diagram for this scenario from the following choices.Option A01220,000Option C01G=2554000i = 12%8i = 12%54000 +25XOption BG=25X5400001220,000Option D018i = 12%54000+25Xi = 12%

Step 1: 8A. choose the correct before tax cash flow diagram for this scenario from the following…

Answered: A large company is planning to purchase…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Printing World thinks it may need a new colour printing press. The press will cost $540,000 but will substantially reduce annual operating costs by $216,000 a year, before tax. The press has a 30% CCA rate and will be in its own asset pool. The first CCA deduction is made in year 0. The press will operate for 4 years and then be worthless. The cost of equity for Printing World is 10%, the cost of debt is 9%, and the company’s target debt-equity ratio is 0.50. The company’s tax rate is 30%. a. What is the NPV of buying the press?.
A8 A machine has an initial cost of P50,000 and a salvage value of P10,000 after 10 years. What is the book value after five years using straight-line depreciation?
A front-end loader costs $70,000 and has a depreciable salvage value of $10,000 at the end of its 5-year useful life. Use MACRS depreciation to compute the depreciation schedule and book value of the equipment.
Assuming 25% tax rate, 20% CCA rate and 10% discount rate, recommend the better of the following equipment, with support. Initial Cost Useful Life Salvage Value Annual Maintenance A $110,000 8 years $10,000 $1,100 B $150,000 12 years $25,000 $1,500
Engineering Economics problem. Help me for the solution
A machine has a first cost of P50,000 with interest rate of 10% annually, Expected salvage value atter 10 years is P5,000. Find the total depreciation after 1 years using sinking fund method.
3 A business needs to purchase packaging equipment that will provide revenue of $120,000 per year for 10 years; operating costs are $40,000 per year for 10 years. The equipment costs $220,000, has an estimated useful life of 10 years, and has a salvage value of $20,000 at the end of that period. It is depreciated using the sum-of-the-years-digits method. The company pays income tax at a rate of 30%, VAT of 16% and MARR of 10%. To acquire the equipment, a loan of $70,000 is requested at a rate of 12.5% annual interest, which must be repaid in six years through equal fixed payments (Rents) each year-end, the first one a year after the purchase. Determine the NPV, IRR, EAC, COST/BENNEFIT. *Please show procedure in Excel*
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A startup is considering buying a $295,000 piece of equipment. If it purchases the equipment, it will take a loan for the entire amount; the interest on the loan is 2%, and the loan will be repaid in 5 equal end of year payments. The startup estimates that the equipment would generate an additional $170,000 of revenue each year. At the end of 5 years, the equipment would have a salvage value of $21,000. The tax rate is 24%. Assuming a planning horizon of 5 years, that the equipment is depreciated using MACRS (3-year property class), and that the medical practice uses an after-tax MARR of 9%, compute the PW and determine whether the startup should invest in the equipment. Click here to access the TVM Factor Table calculator. Click here to access the MACRS-GDS Property Classes. Click here to access the MACRS-GDS percentages page. Click here to access the MACRS-GDS percentages for 27.5-year residential rental property. $ Carry all interim calculations to 5 decimal places and then round…

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