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Machine Technotronic costs $2,000,000, has a four-year life with expected salvage value in three years of $716,800, and has pre-tax operating costs of $480,000 per year. Machine is in Class 8 (CCA rate of 20 percent per year, Accelerated Investment Incentive in the first year is applied). If your tax rate is 35 percent and your discount rate is 19 percent, compute the EAC (equivalent annual cost) for Machine Technotronic. Give the answer in thousands of dollars without decimal places, rounding to the nearest thousand (e.g., if the answer would be $154,790.34, give 155; or if the answer would be $154,392.28, give 154). Answer:

Machine Technotronic costs $2,000,000, has a four-year life with expected salvage value in three years of $716,800, and has pre-tax operating costs of $480,000 per year. Machine is in Class 8 (CCA rate of 20 percent per year, Accelerated Investment Incentive in the first year is applied). If your tax rate is 35 percent and your discount rate is 19 percent, compute the EAC (equivalent annual cost) for Machine Technotronic. Give the answer in thousands of dollars without decimal places, rounding to the nearest thousand (e.g., if the answer would be $154,790.34, give 155; or if the answer would be $154,392.28, give 154). Answer:

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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Machine Technotronic costs $2,000,000, has a four-year life with expected salvage value in three years of $716,800, and has pre-tax operating costs of $480,000 per year. Machine is in Class 8 (CCA rate of 20 percent per year, Accelerated Investment Incentive in the first year is applied). If your tax rate is 35 percent and your discount rate is 19 percent, compute the EAC (equivalent annual cost) for Machine Technotronic. Give the answer in thousands of dollars without decimal places, rounding to the nearest thousand (e.g., if the answer would be $154,790.34, give 155; or if the answer would be $154,392.28, give 154). Answer:
Transcribed Image Text:Machine Technotronic costs $2,000,000, has a four-year life with expected salvage value in three years of $716,800, and has pre-tax operating costs of $480,000 per year. Machine is in Class 8 (CCA rate of 20 percent per year, Accelerated Investment Incentive in the first year is applied). If your tax rate is 35 percent and your discount rate is 19 percent, compute the EAC (equivalent annual cost) for Machine Technotronic. Give the answer in thousands of dollars without decimal places, rounding to the nearest thousand (e.g., if the answer would be $154,790.34, give 155; or if the answer would be $154,392.28, give 154). Answer:
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