An automotive assembly factory is purchasing a new $350,000 machine to help speed up its assembly line. This machine is e generate $90,000 of savings for each of the next 6 years. At the end of the 6 years, the machine will have negligible salvage Assume that the machine depreciated using MACRS 3-year property class, and that the factory's after-tax MARR is 9%. The 30%. Compute the PW and IRR, and determine whether or not the factory should invest in this machine. Click here to access the TVM Factor Table calculator. Click here to access the MACRS-GDS Property Classes. Click here to access the MACRS-GDS percentages page. Click here to access the MACRS-GDS percentages for 27.5-year residential rental property.
An automotive assembly factory is purchasing a new $350,000 machine to help speed up its assembly line. This machine is e generate $90,000 of savings for each of the next 6 years. At the end of the 6 years, the machine will have negligible salvage Assume that the machine depreciated using MACRS 3-year property class, and that the factory's after-tax MARR is 9%. The 30%. Compute the PW and IRR, and determine whether or not the factory should invest in this machine. Click here to access the TVM Factor Table calculator. Click here to access the MACRS-GDS Property Classes. Click here to access the MACRS-GDS percentages page. Click here to access the MACRS-GDS percentages for 27.5-year residential rental property.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:An automotive assembly factory is purchasing a new $350,000 machine to help speed up its assembly line. This machine is expected to
generate $90,000 of savings for each of the next 6 years. At the end of the 6 years, the machine will have negligible salvage value.
Assume that the machine depreciated using MACRS 3-year property class, and that the factory's after-tax MARR is 9%. The tax rate is
30%. Compute the PW and IRR, and determine whether or not the factory should invest in this machine.
Click here to access the TVM Factor Table calculator.
Click here to access the MACRS-GDS Property Classes.
Click here to access the MACRS-ĠDS percentages page.
Click here to access the MACRS-GDS percentages for 27.5-year residential rental property.
PW = $
Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. The tolerance is ±10.
IRR =
%
Round entry to 1 decimal place. The tolerance is ±0.2.
Should the automotive company purchase the new fixture?
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