Project Section 3: You are considering buying an industrial equipment whose price is given below equipment whose price 380000. The equipment is expected to earn an annual revenue of $ 150,000. The equipment will be depreciated under MACRS as a five-year recovery property. The equipment will be used for seven years, at the end of which time, you can sell it for $50,000. Your company's marginal tax rate is 35% over the project period. Perform the following: a) Determine the net after-tax cash flows for each period over the project life. b) Net present worth assuming company MARR = 15%. c) Annual equivalent cash flow company MARR = 15%. d) IRR of the project. Project Section 3: You are considering buying an industrial equipment whose price is given below. equipment whose price 380000. The equipment is expected to earn an annual revenue of $150,000. The equipment will be depreciated under MACRS as a five-year recovery property. The equipment will be used for seven years, at the end of which time, you can sell it for $50,000. Your company's marginal tax rate is 35% over the project period. Perform the following: a) Determine the net after-tax cash flows for each period over the project life. b) Net present worth assuming company MARR = 15%. c) Annual equivalent cash flow company MARR 15%. d) IRR of the project.
Project Section 3: You are considering buying an industrial equipment whose price is given below equipment whose price 380000. The equipment is expected to earn an annual revenue of $ 150,000. The equipment will be depreciated under MACRS as a five-year recovery property. The equipment will be used for seven years, at the end of which time, you can sell it for $50,000. Your company's marginal tax rate is 35% over the project period. Perform the following: a) Determine the net after-tax cash flows for each period over the project life. b) Net present worth assuming company MARR = 15%. c) Annual equivalent cash flow company MARR = 15%. d) IRR of the project. Project Section 3: You are considering buying an industrial equipment whose price is given below. equipment whose price 380000. The equipment is expected to earn an annual revenue of $150,000. The equipment will be depreciated under MACRS as a five-year recovery property. The equipment will be used for seven years, at the end of which time, you can sell it for $50,000. Your company's marginal tax rate is 35% over the project period. Perform the following: a) Determine the net after-tax cash flows for each period over the project life. b) Net present worth assuming company MARR = 15%. c) Annual equivalent cash flow company MARR 15%. d) IRR of the project.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
3
Transcribed Image Text:Project Section 3: You are considering
buying an industrial equipment whose
price is given below equipment whose
price 380000. The equipment is
expected to earn an annual revenue of $
150,000. The equipment will be
depreciated under MACRS as a five-year
recovery property. The equipment will be
used for seven years, at the end of which
time, you can sell it for $50,000. Your
company's marginal tax rate is 35% over
the project period. Perform the following:
a) Determine the net after-tax cash
flows for each period over the project life.
b) Net present worth assuming company
MARR = 15%. c) Annual equivalent
cash flow company MARR = 15%. d)
IRR of the project.
Project Section 3: You are considering buying an industrial equipment whose price is given below.
equipment whose price 380000. The equipment is expected to earn an annual revenue of $150,000. The
equipment will be depreciated under MACRS as a five-year recovery property. The equipment will be
used for seven years, at the end of which time, you can sell it for $50,000. Your company's marginal tax
rate is 35% over the project period. Perform the following:
a) Determine the net after-tax cash flows for each period over the project life.
b) Net present worth assuming company MARR = 15%.
c) Annual equivalent cash flow company MARR 15%.
d) IRR of the project.
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