A Startup is considering buying a $300,000 prece the it purchases of equipment. If equipment, to will take a luan for the entire amout; the interest on the loan is 3% and the luan will be repond in 5 equall end of year payments. The Startup estimaks that the equipment would generall an additional 81600212 At the NE collenue Grad

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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A Startup is considering buying a $300,000 prece
of equipment. If it puranases the equipment, to will
take a loan for the entire amout; the interest
on the loan is 3%. and the luan will be repond in
5 equal end of year payments. The Startup estimaks
that the equipment would generall an additional
$160,000 of revenue each year. At the end of
5 year, the equipment would have a salvague.
value of $20,000. The tax rate is 25% Assuming
a planning horizon of 5 years. that the equipment
as depreciated using MACKS (3-year property class)
and that the medical practice uses
MARK of 7%.
an after tax
(a) Compute the Present Worth and determine whether the
startup Should invest in the equipment
(b) Re - compute the present worth if there exists a cl.
inflation / year.
would
descision
your
change?
Transcribed Image Text:A Startup is considering buying a $300,000 prece of equipment. If it puranases the equipment, to will take a loan for the entire amout; the interest on the loan is 3%. and the luan will be repond in 5 equal end of year payments. The Startup estimaks that the equipment would generall an additional $160,000 of revenue each year. At the end of 5 year, the equipment would have a salvague. value of $20,000. The tax rate is 25% Assuming a planning horizon of 5 years. that the equipment as depreciated using MACKS (3-year property class) and that the medical practice uses MARK of 7%. an after tax (a) Compute the Present Worth and determine whether the startup Should invest in the equipment (b) Re - compute the present worth if there exists a cl. inflation / year. would descision your change?
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