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An automobile-manufacturing company isconsidering purchasing an industrial robot to do spotwelding, which is currently done by skilled labor.The initial cost of the robot is $210,000, and theannual labor savings are projected to be $150,000.If purchased, the robot will be depreciated underMACRS as a five-year recovery property. The robotwill be used for seven years, at the end of which time,the firm expects to sell it for $60,000. The company’s marginal tax rate is 35% over the project period.Determine the net after-tax cash flows for each periodover the project life. Assume MARR = 15%

An automobile-manufacturing company isconsidering purchasing an industrial robot to do spotwelding, which is currently done by skilled labor.The initial cost of the robot is $210,000, and theannual labor savings are projected to be $150,000.If purchased, the robot will be depreciated underMACRS as a five-year recovery property. The robotwill be used for seven years, at the end of which time,the firm expects to sell it for $60,000. The company’s marginal tax rate is 35% over the project period.Determine the net after-tax cash flows for each periodover the project life. Assume MARR = 15%

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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An automobile-manufacturing company is
considering purchasing an industrial robot to do spot
welding, which is currently done by skilled labor.
The initial cost of the robot is $210,000, and the
annual labor savings are projected to be $150,000.
If purchased, the robot will be depreciated under
MACRS as a five-year recovery property. The robot
will be used for seven years, at the end of which time,
the firm expects to sell it for $60,000. The company’s marginal tax rate is 35% over the project period.
Determine the net after-tax cash flows for each period
over the project life. Assume MARR = 15%

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