The fixed-capital investment for an existing chemical plant is $20 million. Annual property taxes amount to 1 percent of the fixed-capital investment, and state income taxes are 5 percent of the gross earnings. The net income after all taxes is $2 million, and the federal income taxes amount to 35 percent of gross earnings. If the same plant had been constructed for the same fixed-capital investment but at a location where property taxes were 4 percent of the fixed- capital investment and state income taxes were 2 percent of the gross earnings, what would be the net income per year after taxes, assuming all other cost factors were unchanged?

The fixed-capital investment for an existing chemical plant is $20 million. Annual property taxes amount to 1 percent of the fixed-capital investment, and state income taxes are 5 percent of the gross earnings. The net income after all taxes is $2 million, and the federal income taxes amount to 35 percent of gross earnings. If the same plant had been constructed for the same fixed-capital investment but at a location where property taxes were 4 percent of the fixed- capital investment and state income taxes were 2 percent of the gross earnings, what would be the net income per year after taxes, assuming all other cost factors were unchanged?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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