An engineer is working on the layout of a new research and experimentation facility. Two plant operators will be required. If,however, an additional $100,000 of instrumentation and remote controls were added, the plant could be run by a single operator. The total before-tax cost of each plant operator is projected to be $35,000 per year. The instrumentation and controls will be depreciated by means of the modified accelerated cost recovery system (MACRS). If this corporation (22% combined corporate tax rate) invests in the additional instrumentation and controls, how long will it take for the after-tax benefits to equal the $100,000 cost? In other words, what is the after-tax payback period?
An engineer is working on the layout of a new research and experimentation facility. Two plant operators will be required. If,however, an additional $100,000 of instrumentation and remote controls were added, the plant could be run by a single operator. The total before-tax cost of each plant operator is projected to be $35,000 per year. The instrumentation and controls will be
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