Michelin is considering going "lights-out" in the mixing area of the business that operates 24/7. Currently, personnel with a loaded cost of $520,000 per year are used to manually weigh real rubber, synthetic rubber, carbon black, oils, and other components prior to manual insertion in a Banbary mixer that provides a homogeneous blend of rubber for making tires (rubber products). New technology is available that has the reliability and consistency desired to equal or exceed the quality of blend now achieved manually. It requires an investment of $2,100,000, with $85,000 per year operational costs and will replace all the manual effort described above. The planning horizon is 8 years, and there will be a $220,000 salvage value at that time for the new technology. Marginal taxes are 25%, and the after-tax MARR is 10%. The new investment relates to the 7-Year Property Class.

Michelin is considering going "lights-out" in the mixing area of the business that operates 24/7. Currently, personnel with a loaded cost of $520,000 per year are used to manually weigh real rubber, synthetic rubber, carbon black, oils, and other components prior to manual insertion in a Banbary mixer that provides a homogeneous blend of rubber for making tires (rubber products). New technology is available that has the reliability and consistency desired to equal or exceed the quality of blend now achieved manually. It requires an investment of $2,100,000, with $85,000 per year operational costs and will replace all the manual effort described above. The planning horizon is 8 years, and there will be a $220,000 salvage value at that time for the new technology. Marginal taxes are 25%, and the after-tax MARR is 10%. The new investment relates to the 7-Year Property Class.

Name: Determine the annual cost of purchasing the new technology. $Carry al
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Description: Determine the annual cost of purchasing the new technology. $Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±50. Michelin is considering going "lights-out" in the mixing ar

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 16PB: At Stardust Gems, a faux gem and jewelry company, the setting department is a bottleneck. The...

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Michelin is considering going “lights out” in the mixing area of the business that operates 24/7. Currently, personnel with a loaded cost of $600,000 per year are used to manually weigh real rubber, synthetic rubber, carbon black, oils, and other components prior to manual insertion in a Banbary mixer that provides a homogeneous blend of rubber for making tires (rubber products). New technology is available that has the reliability and consistency desired to equal or exceed the quality of blend now achieved manually. It requires an investment of $2.5 million, with $110,000 per year operational costs and will replace all of the manual effort described above. The planning horizon is 8 years and there will be a $300,000 salvage value at that time for the new technology. The income-tax rate is 25% and the after-tax MARR is 10%. Determine the annual cost of purchasing the new technology and the EUAC of the two scenarios
Michelin is considering going “lights out” in the mixing area of the business that operates 24/7. Currently, personnel with a loaded cost of $600,000 per year are used to manually weigh real rubber, synthetic rubber, carbon black, oils, and other components prior to manual insertion in a Banbary mixer that provides a homogeneous blend of rubber for making tires (rubber products). New technology is available that has the reliability and consistency desired to equal or exceed the quality of blend now achieved manually. It requires an investment of $2.5 million, with $110,000 per yearoperational costs and will replace all of the manual effort described above. The planning horizon is 8 years and there will be a $300,000 salvage value at that time for the new technology. The income-tax rate is 25% and the after-tax MARR is 10%. a. Determine the annual cost of purchasing the new technology. b. Determine the annual cost of continuing with the manual mixing. c. Determine the amount of the…
Michelin is considering going "lights-out" in the mixing area of the business that operates 24/7. Currently, personnel with a loaded cost of $560,000 per year are used to manually weigh real rubber, synthetic rubber, carbon black, oils, and other components prior to manual insertion in a Banbary mixer that provides a homogeneous blend of rubber for making tires (rubber products). New technology is available that has the reliability and consistency desired to equal or exceed the quality of blend now achieved manually. It requires an investment of $2,300,000, with $95,000 per year operational costs and will replace all the manual effort described above. The planning horizon is 8 years, and there will be a $260,000 salvage value at that time for the new technology. Marginal taxes are 25%, and the after-tax MARR is 10%. The new investment relates to the 7-Year Property Class. Click here to access the TVM Factor Table Calculator Click here to access the MACRS-GDS table. Part a Determine the…
4a. Michelin is considering going “lights out" in the mixing area of the business that operates 24/7. Currently, personnel with a loaded cost of $600,000 per year are used to manually weigh real rubber, synthetic rubber, carbon black, oils, and other components prior to manual insertion in a Banbary mixer that provides a homogeneous blend of rubber for making tires (rubber products). New technology is available that has the reliability and consistency desired to equal or exceed the quality of blend now achieved manually; it will replace all of the manual effort described above. The income-tax rate is 25% and the after-tax MARR is 10%. Determine the before-tax CF for Year 2 (only - not a total) if they decide to continue with manual mixing.
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