Raytheon wishes to use an automated environmental chamber in the manufacture of electronic components. The chamber is to be used for rigorous reliability testing and burn-in. It is installed for $1,320,000 and will have a salvage value of $160,000 after 8 years. Its use will create an opportunity to increase sales by $650,000 per year and will have operating expenses of $250,000 per year. All dollar amounts are expressed in real dollars. Depreciation follows MACRS 5-year property, taxes are 25%, the real after-tax MARR is 10%, and inflation is 3.2%. a. Determine the actual after-tax cash flows for each year. ATCFO = $ ATCF - $ ATCF, = $ ATCF3 = $ ATCF = $ ATCF; - $ ATCF, = $ ATCF, - $ ATCF: - $
Raytheon wishes to use an automated environmental chamber in the manufacture of electronic components. The chamber is to be used for rigorous reliability testing and burn-in. It is installed for $1,320,000 and will have a salvage value of $160,000 after 8 years. Its use will create an opportunity to increase sales by $650,000 per year and will have operating expenses of $250,000 per year. All dollar amounts are expressed in real dollars. Depreciation follows MACRS 5-year property, taxes are 25%, the real after-tax MARR is 10%, and inflation is 3.2%. a. Determine the actual after-tax cash flows for each year. ATCFO = $ ATCF - $ ATCF, = $ ATCF3 = $ ATCF = $ ATCF; - $ ATCF, = $ ATCF, - $ ATCF: - $
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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