The defender in a multiple-effect solar still manufacturing plant has a market value of $130,000 and expected annual operating costs of $70,000 with no salvage value after its remaining life of three years. The depreciation charges for the next three years will be $69,960, $49,960, and $35,720. Assume the company’s effective tax rate is 35% and its after-tax MARR is 12%. A present worth equation for comparing the defender against a challenger that also has a 3-year life is being developed. Determine the after-tax cash flow for year 2 only used in the PW relation.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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The defender in a multiple-effect solar still manufacturing plant has a market value of $130,000 and expected annual operating costs of $70,000 with no salvage value after its remaining life of three years. The depreciation charges for the next three years will be $69,960, $49,960, and $35,720. Assume the company’s effective tax rate is 35% and its after-tax MARR is 12%. A present worth equation for comparing the defender against a challenger that also has a 3-year life is being developed. Determine the after-tax cash flow for year 2 only used in the PW relation.

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