ATCF9 = $ ATCF10 = $ ATCF11 = $ ATCF12 = $ b. Determine the PW of the after-tax cash flows. PW $T = $ c. Determine the AW of the after-tax cash flows. AW $T = $ d. Determine the FW of the after-tax cash flows. FW $T = $ e. Determine the combined IRR of the after-tax cash flows. IRRC % f. Determine the combined ERR of the after-tax
ATCF9 = $ ATCF10 = $ ATCF11 = $ ATCF12 = $ b. Determine the PW of the after-tax cash flows. PW $T = $ c. Determine the AW of the after-tax cash flows. AW $T = $ d. Determine the FW of the after-tax cash flows. FW $T = $ e. Determine the combined IRR of the after-tax cash flows. IRRC % f. Determine the combined ERR of the after-tax
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:ATCF9 = $
ATCF10 = $
ATCF11 = $
ATCF12
= $
b. Determine the PW of the after-tax cash flows.
PW $T = $
c. Determine the AW of the after-tax cash flows.
AW $T = $
d. Determine the FW of the after-tax cash flows.
FW $T = $
e. Determine the combined IRR of the after-tax
cash flows.
IRRC
=
%
f. Determine the combined ERR of the after-tax
cash flows.
ERR
=
%
g. Determine the real IRR of the after-tax cash
flows.
IRR₁ =
h. Determine the real ERR of the after-tax cash
flows.
ERR₁ =
%
%
Transcribed Image Text:Henredon purchases a high-precision programmable
router for shaping furniture components for
$190,000. It is expected to last 12 years and have a
salvage value of $4,400. Henredon will borrow
$100,000 at 12.4% over 6 years, paying only interest
each year and paying all the principle in the sixth
year. It will produce $42,000 in net revenue each
year during its life. All dollar amounts are expressed
in real dollars. Depreciation follows MACRS 7-year
property, taxes are 25%, the real after-tax MARR is
10%, and inflation is 3.9%.
a. Determine the actual after-tax cash flows for
each year.
ATCF0 = $
ATCF₁ = $
ATCF₂ = $
ATCF3 = $
ATCF4 = $
ATCF5 = $
ATCF6 = $
ATCF7 = $
ATCF8 = $
ATCF9 = $
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