Perform an after-tax cash flow analysis on the following data on the replacement of an old equipment with a more energy-afficient version. Use an effective tax rate of 30% and the straight-line method for depreciation. Initial Investment: 500,000 Useful life: 5 years Terminal Value: 50,000 Annual Revenues, 240,000 Annual Expenses Power: 75,000
Perform an after-tax cash flow analysis on the following data on the replacement of an old equipment with a more energy-afficient version. Use an effective tax rate of 30% and the straight-line method for depreciation. Initial Investment: 500,000 Useful life: 5 years Terminal Value: 50,000 Annual Revenues, 240,000 Annual Expenses Power: 75,000
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Perform an after-tax cash flow analysis on the following data on the replacement of an old equipment with a more energy-afficient version. Use an effective tax rate of 30% and the straight-line method for
Initial Investment: 500,000
Useful life: 5 years
Terminal Value: 50,000
Annual Revenues, 240,000
Annual Expenses
Power: 75,000
Maintenance: 25,000
Property Insurance: 20,000
1. If the after-tax MARR is 6%, what is the net present worth (in pesos) of replacing the old equipment? (2 decimal places)
2. After evaluation, is the replacement of the old equipment economically feasible?
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