Problem 17.049: Calculate the after-tax AW of two alternatives A European candy manufacturing plant manager must select a new irradiation system to ensure the safety of specific ingredients. while being economical. The two alternatives available have the following estimates: System First Cost, $ CFBT, $ per Year Life, Years A B. -100,000 20,000 -120,000 60,000 3. The company is in the 35% tax bracket and assumes classical straight line depreciation for altemative comparisons performed at an after-tax minimum acceptable rate of return (MARR) of 7% per year. A salvage value of zero is used when depreciation is calculated; however, system B can be sold after 5 years for an estimated 12% of its first cost. System A has no anticipated salvage value. Determine which is more economical using an annual worth (AW) analysis worked by hand. 7274 The annual worth analysis for system A is determined to be $ The annual worth analysis for system Bis determined to be $ System A v is selected.

Problem 17.049: Calculate the after-tax AW of two alternatives A European candy manufacturing plant manager must select a new irradiation system to ensure the safety of specific ingredients. while being economical. The two alternatives available have the following estimates: System First Cost, $ CFBT, $ per Year Life, Years A B. -100,000 20,000 -120,000 60,000 3. The company is in the 35% tax bracket and assumes classical straight line depreciation for altemative comparisons performed at an after-tax minimum acceptable rate of return (MARR) of 7% per year. A salvage value of zero is used when depreciation is calculated; however, system B can be sold after 5 years for an estimated 12% of its first cost. System A has no anticipated salvage value. Determine which is more economical using an annual worth (AW) analysis worked by hand. 7274 The annual worth analysis for system A is determined to be $ The annual worth analysis for system Bis determined to be $ System A v is selected.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Problem 17.049: Calculate the after-tax AW of two alternatives
A European candy manufacturing plant manager must select a new irradiation system to ensure the safety of specific ingredients.
while being economical. The two alternatives available have the following estimates:
System
First Cost, $
CFBT, $ per Year
Life, Years
A
B.
-100,000
-120,000
60,000
20,000
3.
The company is in the 35% tax bracket and assumes classical straight line depreciation for altemative comparisons performed at an
after-tax minimum acceptable rate of return (MARR) of 7% per year. A salvage value of zero is used when depreciation is calculated;
however, system B can be sold after 5 years for an estimated 12% of its first cost. System A has no anticipated salvage value.
Determine which is more economical using an annual worth (AW) analysis worked by hand.
7274
The annual worth analysis for system A is determined to be $
The annual worth analysis for system Bis determined to be $
System A
v is selected.

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