The associated estimates are summarized below: $75,000 nnual receipts nnual expenses $45,000 seful life alvage value 8 years $20,000 preciation will be used, and the effective income tax rate is per year. Determine whether this investment is an attracti RSIT
The associated estimates are summarized below: $75,000 nnual receipts nnual expenses $45,000 seful life alvage value 8 years $20,000 preciation will be used, and the effective income tax rate is per year. Determine whether this investment is an attracti RSIT
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:1. A start-up biotech company is considering making an investment of $100,000 in a new
filtration system. The associated estimates are summarized below:
Annual receipts
$75,000
$45,000
Annual expenses
Useful life
8 years
$20,000
Salvage value
Straight line depreciation will be used, and the effective income tax rate is 20%. The After-
tax MARR is 15% per year. Determine whether this investment is an attractive option for the
company.
RSIT
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