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A solar factory is considering to invest $100,000 in a new machine. The necessity for this machine is predicted to endure only two years due to a quick shift in product mix, after which the machine is expected to have a salvage value of $40,000. The addition of this equipment to the current manufacturing plant is expected to bring $65,000 per year in revenue and the cost of operating is anticipated to be $7,000 per year. The factory only has $75,000 in equity funds, so it needs to borrow the remaining $25,000 at an 8% yearly interest rate, which will be paid back in two equal annual installments. The factory’s effective corporate tax rate is 18%. Assume the asset qualifies for a MACRS property classification of seven years. What is the project’s net present value with a MARR of 16%? (First, you should determine the annual after-tax cash flows)   A) -$7,651.5   B) $12,891.9   C) $17,348.5   D) Answers A, B and C are not correct

A solar factory is considering to invest $100,000 in a new machine. The necessity for this machine is predicted to endure only two years due to a quick shift in product mix, after which the machine is expected to have a salvage value of $40,000. The addition of this equipment to the current manufacturing plant is expected to bring $65,000 per year in revenue and the cost of operating is anticipated to be $7,000 per year. The factory only has $75,000 in equity funds, so it needs to borrow the remaining $25,000 at an 8% yearly interest rate, which will be paid back in two equal annual installments. The factory’s effective corporate tax rate is 18%. Assume the asset qualifies for a MACRS property classification of seven years. What is the project’s net present value with a MARR of 16%? (First, you should determine the annual after-tax cash flows)   A) -$7,651.5   B) $12,891.9   C) $17,348.5   D) Answers A, B and C are not correct

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Economics 

A solar factory is considering to invest $100,000 in a new machine. The necessity for this machine is predicted to endure only two years due to a quick shift in product mix, after which the machine is expected to have a salvage value of $40,000. The addition of this equipment to the current manufacturing plant is expected to bring $65,000 per year in revenue and the cost of operating is anticipated to be $7,000 per year. The factory only has $75,000 in equity funds, so it needs to borrow the remaining $25,000 at an 8% yearly interest rate, which will be paid back in two equal annual installments. The factory’s effective corporate tax rate is 18%. Assume the asset qualifies for a MACRS property classification of seven years. What is the project’s net present value with a MARR of 16%? (First, you should determine the annual after-tax cash flows)

 

A) -$7,651.5

 

B) $12,891.9

 

C) $17,348.5

 

D) Answers A, B and C are not correct 

 

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