The defender in a multiple-effect solar cell 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 3 years. The depreciation charges for the next 3 years will be $69,960, $49,960, and $35,720. Using an effective tax rate of 35% and an after-tax MARR of 12% per year, determine the cash flow after taxes (CFAT) for year 2 only that can be used in a PW equation for comparing the defender against a challenger that also has a 3-year life.
The defender in a multiple-effect solar cell 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 3 years. The depreciation charges for the next 3 years will be $69,960, $49,960, and $35,720. Using an effective tax rate of 35% and an after-tax MARR of 12% per year, determine the cash flow after taxes (CFAT) for year 2 only that can be used in a PW equation for comparing the defender against a challenger that also has a 3-year life.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
The defender in a multiple-effect solar cell
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 3 years. The
next 3 years will be $69,960, $49,960, and
$35,720. Using an effective tax rate of 35% and
an after-tax MARR of 12% per year, determine
the cash flow after taxes (CFAT) for year 2 only
that can be used in a PW equation for comparing
the defender against a challenger that also has a
3-year life.
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