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FAME Industries is a small business expanding its machining operations and plans to purchase 10 CNC machines for a total of $1,500,000; this is considered MACRS 5-year property. The business estimates that these machines will generate an additional revenue of $230,000 per year; they plan to keep the machines for the next 8 years. At the end of 8 years, the CNC machines would have a salvage value of $150,000. The tax rate is 26%, the CNC machines are eligible for a Section 179 deduction, and FAME Industries uses an after-tax MARR of 8%. Compute the PW and determine whether FAME Industries should invest in the CNC machines. 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. $ Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. The tolerance is ±20. Should FAME Industries invest in the CNC machines?

FAME Industries is a small business expanding its machining operations and plans to purchase 10 CNC machines for a total of $1,500,000; this is considered MACRS 5-year property. The business estimates that these machines will generate an additional revenue of $230,000 per year; they plan to keep the machines for the next 8 years. At the end of 8 years, the CNC machines would have a salvage value of $150,000. The tax rate is 26%, the CNC machines are eligible for a Section 179 deduction, and FAME Industries uses an after-tax MARR of 8%. Compute the PW and determine whether FAME Industries should invest in the CNC machines. 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. $ Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. The tolerance is ±20. Should FAME Industries invest in the CNC machines?

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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FAME Industries is a small business expanding its machining operations and plans to purchase 10 CNC machines for a total of $1,500,000; this is considered MACRS 5-year property. The business estimates that these machines will generate an additional revenue of $230,000 per year; they plan to keep the machines for the next 8 years. At the end of 8 years, the CNC machines would have a salvage value of $150,000. The tax rate is 26%, the CNC machines are eligible for a Section 179 deduction, and FAME Industries uses an after-tax MARR of 8%. Compute the PW and determine whether FAME Industries should invest in the CNC machines. 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. $ Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. The tolerance is ±20. Should FAME Industries invest in the CNC machines?
Transcribed Image Text:FAME Industries is a small business expanding its machining operations and plans to purchase 10 CNC machines for a total of $1,500,000; this is considered MACRS 5-year property. The business estimates that these machines will generate an additional revenue of $230,000 per year; they plan to keep the machines for the next 8 years. At the end of 8 years, the CNC machines would have a salvage value of $150,000. The tax rate is 26%, the CNC machines are eligible for a Section 179 deduction, and FAME Industries uses an after-tax MARR of 8%. Compute the PW and determine whether FAME Industries should invest in the CNC machines. 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. $ Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. The tolerance is ±20. Should FAME Industries invest in the CNC machines?
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