Machine X costs $248,751 with annual operating and maintenance costs of $9,980. Machine Y costs $264,500 with annual operating and maintenance costs of $5120. Both machines are Class 43 (CCA=30%). The company needs the machines for 11 years, after which machine X can be sold for $12,257 and machine Y can be sold for $13,033. The company’s MARR is 10%, and its tax rate is 27%. Do an after-tax analysis to determine which machine should be purchased.

Machine X costs $248,751 with annual operating and maintenance costs of $9,980. Machine Y costs $264,500 with annual operating and maintenance costs of $5120. Both machines are Class 43 (CCA=30%). The company needs the machines for 11 years, after which machine X can be sold for $12,257 and machine Y can be sold for $13,033. The company’s MARR is 10%, and its tax rate is 27%. Do an after-tax analysis to determine which machine should be purchased.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 2E

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