An asset with 5-year MACRS life will be purchased for $15,000. It will produce net annaul benefits of $3,500 per year for 6years, after which time it will have a net salvage value of zero and will be retired. The company's marginal tax rate is 36%.Complete the following after-tax cash flow table.Enter your answer with 2 decimal places, as follow: 1000.00EOYBTCFMACRSDepreciationTaxable IncomeTaxesATCF0-15000.00-15000.001 3500.00500.00180.003320.0023500.0033500.004 3500.005 3500.001728.003500.00864.00-1300.00-468.003968.00

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Answered: An asset with 5-year MACRS life will be…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A large company is planning to purchase equipment costing $220,000 and will depreciate it fully using straight-line depreciation over 8 years. The company expects that the investment will have an annual benefit of $54,000. Each use of the equipment will also provide a benefit of $25. In 5 years, there will be no salvage value for the equipment. The company's combined marginal tax rate is 24%. Based on 12% after-tax MARR, how many uses of the equipment must the company have each year in order to justify its investment? Question 8 Part A: Choose the correct Before Tax Cash Flow Diagram for this scenario from the following choices. Option A 0 1 220,000 Option C 0 1 G=25 54000 i = 12% 8 i = 12% 54000 +25X Option B G=25X 54000 0 1 220,000 Option D 0 1 8 i = 12% 54000+25X i = 12%
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