A portable concrete test instrument used in construction for evaluating and profiling concrete surfaces (MACRS-GDS 5-year property class) is under consideration by a construction firm for $25,000. The instrument will be used for 6 years and be worth $1,250 at that time. The annual cost of use and maintenance will be $7,500. Alternatively, a more automated instrument (same property class) available from the manufacturer costs $26,000, with use and maintenance costs of only $8,000 and salvage value after 6 years of $3,500. The marginal tax rate is 25%, and MARR is an after-tax 12%. Determine which alternative is less costly, based upon comparison of after-tax annual worth. Show the AW values used to make your decision: Alternative 1: $ Alternative 2: $ Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±10. Click here to access the TVM Factor Table Calculator Click here to access the MACRS-GDS table. eTextbook and Media Save for Later Attempts: 0 of 3 used Submit Answer

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter17: Long-term Investment Analysis
Section: Chapter Questions
Problem 7E
Question
A portable concrete test instrument used in construction for evaluating and profiling concrete surfaces (MACRS-GDS
5-year property class) is under consideration by a construction firm for $25,000. The instrument will be used for 6 years
and be worth $1,250 at that time. The annual cost of use and maintenance will be $7,500. Alternatively, a more
automated instrument (same property class) available from the manufacturer costs $26,000, with use and maintenance
costs of only $8,000 and salvage value after 6 years of $3,500. The marginal tax rate is 25%, and MARR is an after-tax
12%.
Determine which alternative is less costly, based upon comparison of after-tax annual worth.
Show the AW values used to make your decision:
Alternative 1: $
Alternative 2: $
Carry all interim calculations to 5 decimal places and then round your final answer to the nearest
dollar. The tolerance is ±10.
Click here to access the TVM Factor Table Calculator
Click here to access the MACRS-GDS table.
eTextbook and Media
Save for Later
Attempts: 0 of 3 used Submit Answer
Transcribed Image Text:A portable concrete test instrument used in construction for evaluating and profiling concrete surfaces (MACRS-GDS 5-year property class) is under consideration by a construction firm for $25,000. The instrument will be used for 6 years and be worth $1,250 at that time. The annual cost of use and maintenance will be $7,500. Alternatively, a more automated instrument (same property class) available from the manufacturer costs $26,000, with use and maintenance costs of only $8,000 and salvage value after 6 years of $3,500. The marginal tax rate is 25%, and MARR is an after-tax 12%. Determine which alternative is less costly, based upon comparison of after-tax annual worth. Show the AW values used to make your decision: Alternative 1: $ Alternative 2: $ Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±10. Click here to access the TVM Factor Table Calculator Click here to access the MACRS-GDS table. eTextbook and Media Save for Later Attempts: 0 of 3 used Submit Answer
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