Abbott placed into service a flexible manufacturing cell costing $860,000 early this year. They financed $425,000 of the initial cost of the cell at 11% per year over 5 years. Gross income due to the cell is expected to be $750,000 with deductible expenses of $465,000. Depreciation is based on MACRS-GDS, and the cell is in the 7-year property class. Abbott's marginal tax rate is 25%, MARR is 9% after taxes, and they expect to keep the cell for 8 years. Determine the PW, FW, AW, IRR, and ERR for the investment if: a. The loan is paid back using Method 1 (interest only at the end of each year of the loan, plus principal at the end of the last year). b. The loan is paid back using Method 2 (equal annual principal payments plus interest on the unpaid loan balance). c. The loan is paid back using Method 3 (equal annual principal plus interest payments during each year of the loan). d. The loan is paid back using Method 4 (principal plus interest is paid at the end of the loan period).

Abbott placed into service a flexible manufacturing cell costing $860,000 early this year. They financed $425,000 of the initial cost of the cell at 11% per year over 5 years. Gross income due to the cell is expected to be $750,000 with deductible expenses of $465,000. Depreciation is based on MACRS-GDS, and the cell is in the 7-year property class. Abbott's marginal tax rate is 25%, MARR is 9% after taxes, and they expect to keep the cell for 8 years. Determine the PW, FW, AW, IRR, and ERR for the investment if: a. The loan is paid back using Method 1 (interest only at the end of each year of the loan, plus principal at the end of the last year). b. The loan is paid back using Method 2 (equal annual principal payments plus interest on the unpaid loan balance). c. The loan is paid back using Method 3 (equal annual principal plus interest payments during each year of the loan). d. The loan is paid back using Method 4 (principal plus interest is paid at the end of the loan period).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Why is recording the proceedings of job conferences important?
write a conclusion of the effectiveness of Human resources management and its importance on the economy and organizations.
Who are your manpower
How did you get the formula for letter B?
Why do you think technology is important in your studies?
Within a foreign country, what perspectives must one consider?
When seeking employment, your photo on your social media sites should be
A App Sear G dicti - Clas E Stoc S Sear A Socr 1 http + A Acti X 48ZPVAcexBZXgOK om G dictionary english a. StudentVUE A Minnesota State Ap. A Application | Status. A Apply to Augsburg. e Classroom in moodle To help small businesses make enough money to compete with giant companies 10. A good credit rating is important because you can get a low rate of interest on a loan you can get a loan from the FDIC you can get more investments through an IPO O you can become part of a mutual fund O US ačer & 4. 5 6 7 8 9. r y u k ..
A measure of the goods and services produced using labor and property in the us
Draw and label a circular flow diagram that includes the government.
What is payroll record ? what imformation is included on a payroll record?
Number 34