A tractor for over-the-road hauling is to be purchased by AgriGrow for $80,000. It is expected to be of use to the company for 6 years, after which it will be salvaged for $3,800. Transportation cost savings are expected to be $140,000 per year; however, the cost of drivers is expected to be $53,000 per year, and operating expenses are expected to be $47,000 per year, including fuel, maintenance, insurance, and the like. The company's marginal tax rate is 25 percent, and MARR is 10 percent on after-tax cash flows. Suppose that. to AgriGrow's surprise, they actually dispose of the tractor at the end of the fourth tax year for $5,800. Develop tables using a spreadsheet to determine the ATCF for each year and the after-tax PW, AW, IRR, and ERR after only 4 years. Click here to access the TVM Factor Table Calculator Part a Use straight-line depreciation (no half-year convention). End of Year 0 1 2 3 4 $ $ $ $ $ After-tax PW: $ After-tax AW: $ I ATCF For dollar amounts, carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is +10.

A tractor for over-the-road hauling is to be purchased by AgriGrow for $80,000. It is expected to be of use to the company for 6 years, after which it will be salvaged for $3,800. Transportation cost savings are expected to be $140,000 per year; however, the cost of drivers is expected to be $53,000 per year, and operating expenses are expected to be $47,000 per year, including fuel, maintenance, insurance, and the like. The company's marginal tax rate is 25 percent, and MARR is 10 percent on after-tax cash flows. Suppose that. to AgriGrow's surprise, they actually dispose of the tractor at the end of the fourth tax year for $5,800. Develop tables using a spreadsheet to determine the ATCF for each year and the after-tax PW, AW, IRR, and ERR after only 4 years. Click here to access the TVM Factor Table Calculator Part a Use straight-line depreciation (no half-year convention). End of Year 0 1 2 3 4 $ $ $ $ $ After-tax PW: $ After-tax AW: $ I ATCF For dollar amounts, carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is +10.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Qwicks Solutions is a consulting firm that offers engineering services at the price of $1,000 per…

A: The break-even point is the point at which total cost and total revenue are equal.

Q: The purchasing price of the second-hand bulldozer is $150,000. It will have 8 years service life…

A: Purchase price of bulldozer = $150000 Life of bulldozer = 8 years Salvage value = $10000 First-year…

Q: None

A: Step 1: Calculate the Future Worth of Initial CostFor each method, the initial cost will grow based…

Q: A project your firm is considering for implementation has these estimated costs and revenues: an…

Q: White Oaks Properties builds strip shopping centers and small malls. The company plans to replace…

A: The equal cost, as it is called, is equivalent to the annual cash flows that an asset generates over…

Q: ! Required information An electric switch manufacturing company is trying to decide between three…

A: The Annual Worth calculation method is usually used for comparing alternatives. This method is also…

Q: Your boss has asked you to evaluate the economic viability of refinancing a loan on your plant's…

A: The objective of this question is to determine if refinancing a loan is economically advantageous…

Q: A tractor for over-the-road hauling is to be purchased by AgriGrow for $90,000. It is expected to be…

A: Given information Initial cost=$90000 Salvage value after 6 years=$4000 Transport cost…

Q: Required information The fixed cost at Harley Motors is $5.4 million annually. The main product has…

A: * SOLUTION :- * 11) Variable cost per unit and Total Fixed Costs do not change with change in…

Q: An asset was purchased 5 years ago at a price of $52,000. It was expected to be in service for 8…

A: Here's how to calculate the selling price to recover the invested capital for the asset:1. Calculate…

Q: Handheld fiber optic meters with white light polarization interferometry are useful for measuring…

A: Breakeven point refers to the situation where the total cost is equal to total revenue.

Q: A plant operation has fixed costs of$ | 50,000 per year and variable costs of $50 per unit. When the…

A: The break-even point is the point at which total cost and total revenue are equal, meaning there is…

Q: Please provide steps by step answer with proper explanation with final answer.....

Q: Required information A remotely located air sampling station can be powered by solar cells or by…

A: Annual Worth:It is the expected value of a machine throughout the year. It is the total rent on the…

Q: A firm is considering the “make vs. buy” question for a subcomponent. If the part is made in-house,…

A: The present worth of an annuity can be calculated by using the following formula: Where, A is…

Q: QUESTION 12 A rotational molding operation has fixed costs of $6,000 per year and variable costs of…

A: Total cost is the sum of fixed cost and variable cost. Fixed cost is the cost that remains same at…

Q: The Briggs and Stratton Commercial Division designs and manufacturers small engines for golf turf…

A: The company will be indifferent between the Pull system and the Push system if the Present Worth…

Q: Use straight-line depreciation (no half-year convention). End of Year ATCF 0 1 2 3 4 $ After-tax…

A: Depreciation refers to the decrease in the value of an asset over time due to wear and tear,…

Q: Problem 06.004 Annual Worth and Capital Recovery Calculations A delivery car had a first cost of…

A: Annual Worth analysis: The annual worth (AW) analysis is preferably used to compare alternate…

Q: George has just finished the cost analysis of a brass pump with and without an interior coating. The…

A: Here, it is given that George made an analysis of the use of interior coating in. Brass pump as…

Q: Mowbot Company is evaluating several alternatives for its next new product. Cost and revenue…

A: To determine which alternative Mowbot Company should pursue, we will use Incremental Present Worth…

Q: The fixed cost at Harley Motors are $1 Million annually. The min. product has revenue of $8.90 per…

A: Given Fixed costs = 1 Million $ Revenue per unit = 8.90 $ Variable cost = 4.50 $ per unit

Q: A The fixed costs at Mahi consulting company are $120,000 annually. The annual revenue is $3,000 per…

A: The meaning of annual revenue is the money your business receives during the course of a year. Here,…

Q: For a quick solution to an overheating problem, brass rods, 6 mm in diameter and 5 cm long, are…

A: Convection Heat Transfer from a Brass RodHere's how to determine the power dissipation for a single…

Q: A small automotive supply company manufactures fuel gauges for various types of cars. The company…

A: Break-even level is the level at which the firm producing and selling the good covers its total…

Q: Speedy Delivery Incorporated is updating its delivery system control equipment. As the lead…

A: The annual worth ascertains the annual cash flow throughout the investment period which is…

Question

A tractor for over-the-road hauling is to be purchased by AgriGrow for $80,000. It is expected to be of use to the company for 6 years,
after which it will be salvaged for $3,800. Transportation cost savings are expected to be $140,000 per year; however, the cost of
drivers is expected to be $53,000 per year, and operating expenses are expected to be $47,000 per year, including fuel, maintenance,
insurance, and the like. The company's marginal tax rate is 25 percent, and MARR is 10 percent on after-tax cash flows. Suppose that,
to AgriGrow's surprise, they actually dispose of the tractor at the end of the fourth tax year for $5,800. Develop tables using a
spreadsheet to determine the ATCF for each year and the after-tax PW, AW, IRR, and ERR after only 4 years.
Click here to access the TVM Factor Table Calculator
Part a
Use straight-line depreciation (no half-year convention).
End of Year
ATCF
0
1
2
3
st
4
$
$
$
$
GA
$ I
After-tax PW: $
After-tax AW: $
For dollar amounts, carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is
+10.

After-tax PW: $
After-tax AW: $
For dollar amounts, carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is
+10.
After-tax IRR:
After-tax ERR:
11.79
%
11.34 %
For rates, carry all interim calculations to 5 decimal places and then round your final answer to 1 decimal place. The tolerance is ±0.2.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction

Step 2: Calculation

Step 3: Working

Solution

Trending now

This is a popular solution!

Step by step

Solved in 4 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

A shoe factory has a production capacity of 9,600 units per month. The fixed and variable costs are as follows: Fixed monthly operating cost = P 900,000.00 Material and labor cost = P 200/unit Selling price = P500/unit What is the profit per month if the factory has an efficiency of 80%?
An independent contractor for a transportation company needs to determine whether she should upgrade the vehicle she currently owns or trade her vehicle in to lease a new vehicle. If she keeps her vehicle, she will need to invest in immediate upgrades that cost $4,700 and it will cost $1,450 per year to operate at the end of year that follows. She will keep the vehicle for 6 years; at the end of thi period, the upgraded vehicle will have a salvage value of $4,300. Alternatively, she could trade in her vehicle to lease a new vehicle. Sh estimates that her current vehicle has a trade-in value of $9.300 and that there will be $4,500 due at lease signing. She further estimates that it will cost $3,300 per year to lease and operate the vehicle. The independent contractor's MARR is 12%. Compute the EUAC of both the upgrade and lease alternatives using the insider perspective. Click here to access the TVM Factor Table Calculator. EUAC(keep): EUAC(lease): $ S Carry all interim calculations to…
provide certification & registrations needed to start sole trade truck business; for these services: towing/ carrying = R500, rental-hire = R1500, local moving (furniture/office/warhousing & courier, truck wash, packing/ unpacking) = R1650/day. Regional routes from: Cape town, Durban, johannesburg, blomfontein, port elizabeth. Include detailed business plan for company name (Zltdex transport)
CASE STUDY PEFORMING ROR ANALYSIS FOR 3D PRINTER AND IIOT TECHNOLOGY Background Software used in 3D printer systems manufactured by Spectrum LASER Corp. is currently able to automatically develop hollows, shells, and "tree supports" to save development time. Network printing for use on multiple machines and at different locations globally is available. New software, called JIT II, is being beta tested that will allow lloT-type (Industrial Internet of Things) connections between machines at distant locations. When onboard monitoring sensors detect that a part is about to fail, or it is time to replace one of several high-profile parts, the JIT II software will automatically queue the part's manufacturing code onto a 3D printer that is detected to be locally idle or ready. The company believes it can design and produce the JIT II software, the 3D printers, and the accompanying computer equipment necessary to place this technology in a wide variety of harsh environments-chemically toxic…
White Oaks Properties builds strip shopping centers and small malls. The company plans to replace its refrigeration, cooking, HVAC, and other equipment with newer models in the entire center built 9 years ago. The original purchase price of the equipment was $766,000 nine years ago and the operating cost has averaged $240,000 per year. Determine the equivalent annual cost of the installed equipment, if the company can now sell it for $160,000. The company’s MARR is 25% per year. The equivalent annual cost of the installed equipment is $−
There are two alternative machines for a manufacturing process. Both machines have the same output rate, but they differ in costs. Machine A costs $20,000 to set up and $8,000 per year to operate. It must be completely replaced every 3 years, and it has no salvage value. Machine B costs $50,000 to set up and $2,160 per year to operate. It should last for 5 years and has no salvage value. The costs of two machines are shown below. 0 1 2 3 4 5 Machine A 20,000 8,000 8,000 8,000 Machine B 50,000 2,160 2,160 2,160 2,160 2,160 Assuming the cost of capital is 10%,1. find the equivalent annual cost of Machine A in Box 1. Round it to a whole dollar, and no comma or the dollar sign.2. find the EAC of Machine B in Box 2. The same format as box 1.3. Based on the equivalent annual cost method, type in Box 3 which machine do you recommend, Machine A or Machine B. Question 20 options: Blank # 1 Blank # 2 Blank #…
The AW values for retaining a presently owned machine for additional years are shown in the table. Note that the values represent the AW amount for each of the n years that the asset is kept, i.e., if it is kept 5 more years, the annual worth is $-95,000 for each of the 5 years. Assume that future costs remain as estimated for the replacement study and that used machines like the one presently owned will always be available. (a) What is the ESL and associated AW of the defender at a MARR of 12% per year? (b) A challenger with an ESL of 7 years and an AWC = $-87,000 per year has been identified. Which AW will be less for the respective ESL periods? Retention Period, Years AW Value, $ per Year 1 -80,000 -93,000 3. -82,000 4 -92,000 -95,000 a) The ESL of the defender is year(s) with the lowest AW of S b) The defender has the lower AW at S for n equal to
Nissan is advertising a 24-month lease on the all-electric Leaf for $190 payable at the beginning of each month. The lease requires a $2000 down payment plus the first months payment on signing. No security deposit is required. The lessee pays for maintenance, excess wear and tear, and $0.18 per mile over 12,000 miles per year. Lease end purchase option is $17500 and lease payments total $4560. A disposition fee of $350 is due at the end of the lease period. Assuming an interest rate of 6% compounded monthly, what is the total cost of leasing if you put 40,000 miles at the end of lease?
Question 8 Canada's Wonderland has decided to carry out an analysis to determine when one of its roller coasters should be replaced. The existing roller coaster was purchased 25 years ago for $715,000. The costs of operating and maintaining this ride for a 5-year study period are predicted to be $70,000 in year 1 and would increase by $1,300 each year thereafter (i.e. $71,300 in year 2, $72,600 in year 3, etc.) Canada's Wonderland uses a MARR of 10% for roller coaster projects. (a) If the roller coaster loses value at a rate of 7% per year, what is the salvage value at the end of the study period? (b) What is the EAC for operating & maintenance costs (O&M) after 4 years in the study period? (c) Supposing the salvage value after 2 years in the study period is $100,773, what is the EAC for capital costs after 2 years in the study period? . (d) What is the economic remaining life of the roller coaster (i.e. in the study period)?
EMERGENCY! Production just informed management that one of its five glycol squeezers has been destroyed by a rogue computer virus. Production capability is now only 23000 gallons at most. The squeezer cannot be fixed and IceLess cannot afford a replacement. This breakdown will NOT lower fixed costs. This breakdown will not change variable cost per unit, either. If only 23000 gallons are produced, and the earning target remains $94400 above fixed costs, what price per gallon must now be charged? (show your calculations What is the Contribution Margin Ratio (CMR) if the price is $8.82 per gallon? At a price of $10.95 per gallon, what will be the DOL (assume 23000 gallons are sold , that $94400 above fixed costs is to be earned, and that other costs are as initially given)(show your calculations).
4
Raytheon wishes to use an automated environmental chamber in the manufacture of electronic components. The chamber is to be used for rigorous reliability testing and burn-in. It is installed for $800,000, $350,000 of which is borrowed at 11% for 5 years, and will have a salvage value of $150,000 after 8 years. Its use will create an opportunity to increase sales by $650,000 per year and will have operating expenses of $250,000 per year. Corporate income taxes are 40%. Develop tables using a spreadsheet to determine the ATCF for each year and the after-tax PW, AW, IRR, and ERR, if the chamber is kept for 8 years. After-tax MARR is 10%. Use 7 years class depreciation for MARCS