Milliken uses a digitally controlled dyer for placing intricate and integrated patterns on manufactured carpet squares for home and commercial use. It is purchased for $450,000. It is expected to last 8 years and has a salvage value of $30,000. Increased before tax cash flow due to this dyer is $97,500 per year. Milliken's tax rate is 40%, and the after-tax MARR is 12%. Develop tables using a spreadsheet to determine the ATCF for each year and the after-tax PW, AW, IRR, and ERR after 8 years. Use straight-line depreciation (no half-year convention). Use MACRS-GDS and state the appropriate property class. Use double declining balance depreciation (no half-year convention, no switching). (Round your answer to 2 decimal places for PW and AW. Do not round intermediate computations. Tolerance is +/- 1.00. Round to 2 decimal places and present in percentage format IRR and ERR. Tolerance is +/- 0.02.) ERR IRR AW PW a. b.
Milliken uses a digitally controlled dyer for placing intricate and integrated patterns on manufactured carpet squares for home and commercial use. It is purchased for $450,000. It is expected to last 8 years and has a salvage value of $30,000. Increased before tax cash flow due to this dyer is $97,500 per year. Milliken's tax rate is 40%, and the after-tax MARR is 12%. Develop tables using a spreadsheet to determine the ATCF for each year and the after-tax PW, AW, IRR, and ERR after 8 years. Use straight-line depreciation (no half-year convention). Use MACRS-GDS and state the appropriate property class. Use double declining balance depreciation (no half-year convention, no switching). (Round your answer to 2 decimal places for PW and AW. Do not round intermediate computations. Tolerance is +/- 1.00. Round to 2 decimal places and present in percentage format IRR and ERR. Tolerance is +/- 0.02.) ERR IRR AW PW a. b.
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
Problem 1PS
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Milliken uses a digitally controlled dyer for placing intricate and integrated patterns on manufactured carpet squares for home and commercial use. It is purchased for $450,000. It is expected to last 8 years and has a salvage value of $30,000. Increased before tax cash flow due to this dyer is $97,500 per year. Milliken's tax rate is 40%, and the after-tax MARR is 12%. Develop tables using a spreadsheet to determine the ATCF for each year and the after-tax PW, AW, IRR, and ERR after 8 years.
- Use straight-line
depreciation (no half-year convention). - Use MACRS-GDS and state the appropriate property class.
- Use double declining balance depreciation (no half-year convention, no switching).
(Round your answer to 2 decimal places for PW and
AW. Do not round intermediate computations. Tolerance is +/- 1.00.
Round to 2 decimal places and present in percentage format IRR and
ERR. Tolerance is +/- 0.02.)
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