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 year. 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.

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 year. 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.

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: The AW values for retaining a presently owned machine for additional years are shown in the table.…

A: AW comparisons are essentially the similar as PW comparisons, except that all disbursements and…

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: What would its market value, call it M, have to be after 2 years in order to make its annual worth…

A: In Engineering economics, Annual Worth (AW) is used to compare different cash flow series which…

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: 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: 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: A delivery car had a first cost of $32,000, an annual operating cost of $15,000, and an estimated…

A: The annual worth is the net of all the benefits and costs incurred over a one-year period.…

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

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: 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: 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…

Q: An independent contractor for a transportation company needs to determine whether she should upgrade…

A: Given upgrading cost= 4700operating cost of upgraded vehicle= $1450 per year.Salvage value=…

Q: A portable concrete test instrument used in construction for evaluating and profiling concrete…

A: The Net Present Value of the Project is used as the present value for the annuity calculation in…

Q: provide certification & registrations needed to start sole trade truck business; for these services:…

A: Certifications and Registrations1. **Business Registration**: Register as a sole proprietor with the…

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

A: Annual Payment where F is accumulated sum of amount, n is number of years and that i is…

Q: here are two alternative machines for a manufacturing process. Both machines have the same output…

A: The cost structure of two machine A and B are shown belowMachine AMachine BInitial…

Q: Question 8 Canada's Wonderland has decided to carry out an analysis to determine when one of its…

A: First Cost = 715000 Study period = 5 years MARR = 10%

Q: Leroy purchased an Al-based robotics system with the first cost of $345,000, an AOC of S148,000 per…

A: Given: 3 years: First cost=$345000, AOC=$148000, Salvage value=$140000 5 years: Increase in cost in…

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.

Use MACRS-GDS and state the appropriate property class.
End of Year
ATCF
0
1
2
3
4
$
$
$
$
$
After-tax PW: $
After-tax AW: $

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: Define Present Worth and Annual Worth

VIEW

Step 2: Derive Present worth

VIEW

Step 3: Derive Annual Worth IRR & ERR

VIEW

Solution

VIEW

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

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
Need help.
The annual fixed costs for a given factory are $150,000, the variable cost is $30 per unit and the selling price is $50 per unit. If the production capacity for this factory is 10,000 units per year, how many units should be made to have an annual profit of $25,000? * 7,500 10,000 8,750 7,850 5,700 None
A delivery car had a first cost of $34,000, an annual operating cost of $15,000, and an estimated $5000 salvage value after its 6-year life. Due to an economic slowdown, the car will be retained for only 4 years and must be sold now as a used vehicle. At an interest rate of 12% per year, what must the market value of the used vehicle be in order for its AW value to be the same as the AW if it had been kept for its full life cycle? The market value of the used vehicle is determined to be $ 26423
Please correct Solution with Explanation and do not give image format
None
The following information is available for Product 7TY which EOQ is of 125 kg. The maximum usage level is 250 kg per day while the minimum usage level is 250kg per day. Lead time is between 3-7 days. Calculate the maximum inventory level for Product 7TY,
Evaluate a combined cycle power plant on the basis of the Present Worth Method (PW) when MARR is 12 % per year.Pertinent cost data are as follows: (Power Plant (thousands of $) Investment Cost: $12693 Useful life: 15 ears Market Value (EOY 15) $3,000 Annual Operating expenses: $1,000 Overhaul cost-end of 5th year: $1897 Overhaul cost-end of 10th year. $1819
complete solution, thank you
PRO Engineering is considering whether to purchase or lease a piece of earthmoving equipment.The data associated with the purchase are as followsInitial cost = $150,000Residual value = $12,000Maintenance cost = $1,800/per yearOperator cost per day = $300/dayIf the equipment is rented, the operator cost is incurred, at the rate of $300 per day and $100 for the daily rental of the equipment.Determine the minimum number of days per year the equipment must be used to justify the purchase. Use an interest rate of 7%
A textile processing company is evaluating whether it should retain the current bleaching process that uses chlorine dioxide or replace it with a proprietary oxypure process. The relevant information for each process is shown. Use an interest rate of 15% per year to perform the replacement study. Additionally, write the PMT functions that display the information necessary to make the decision. Process Current Oxypure Original cost 6 years ago, $ 450,000 — Investment cost now, $ — 600,000 Current market value, $ 25,000 — Annual operating cost, $/year 190,000 70,000 Remaining life, years 3 10 Salvage value, $ 0 50,000
Evaluate to total present worth of all the cash-flow of machine ABC for an interest rate of 10% per year. Relevant costs are as follows investment cost = $18,000 useful life = 20 years Market value = $5000 Annual operating expenses =$250 Overhead cost end of the 7th year = $500 Overhead cost end of the 14th year = $800