The Ajax Semiconductor Company is attempting to evaluate the profitability of adding another integrated circuit production line to its present operations. The company would need to purchase two or more acres of land for $275,000 (total). The facility would cost $60,000,000 and have no net MV at the end of five years. The facility could be depreciated using a GDS recovery period of five years. An increment of working capital would be required, and its estimated amount is $10,000,000. Gross income is expected to increase by $30,000,000 per year for five years,andoperating expenses are estimated to be $8,000,000 per year for five years. The firm’s effective income tax rate is 25%. Solve, (a) Set up a table and determine the ATCF for this project. (b) Is the investment worthwhile when the after-tax MARR is 12% per year?
The Ajax Semiconductor Company is attempting to evaluate the profitability of adding another integrated circuit production line to its present operations. The company would need to purchase two or more acres of land for $275,000 (total). The facility would cost $60,000,000 and have no net MV at the end of five years. The facility could be
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