By purchasing a new equipment with an initial cost of $150,000, a corporation expects to receive $32,000 each year for 15 years. Manufacturing and sales expenses will be $8067 per year. Assume SOYD depreciation, a 15-year useful life, and no salvage value. Use a 46% income tax rate. Determine the projected after-tax rate of return. Considering MARR-10%, would you recommend the purchase of the equipment or not?

By purchasing a new equipment with an initial cost of $150,000, a corporation expects to receive $32,000 each year for 15 years. Manufacturing and sales expenses will be $8067 per year. Assume SOYD depreciation, a 15-year useful life, and no salvage value. Use a 46% income tax rate. Determine the projected after-tax rate of return. Considering MARR-10%, would you recommend the purchase of the equipment or not?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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