Two alternative machines will produce the same product, but one is capable of higher-quality work, which can be expected to return greater revenue. The following are relevant data. Determine which is the better alternative, assuming repeatability and using SL depreciation, an income-tax rate of 27%, and an after-tax MARR of 11%. Capital investment Life Calculate the AW value for the Machine A. AWA(11%) = $ Machine A $23,000 12 years $4,000 Terminal BV (and MV) Annual receipts Annual expenses Click the icon to view the interest and annuity table for discrete compounding when the MARR is 11per year. (Round to the nearest dollar.) $152,000 $130,000 Machine B $33,000 6 years $1,500 C... $197,000 $176,000
Two alternative machines will produce the same product, but one is capable of higher-quality work, which can be expected to return greater revenue. The following are relevant data. Determine which is the better alternative, assuming repeatability and using SL depreciation, an income-tax rate of 27%, and an after-tax MARR of 11%. Capital investment Life Calculate the AW value for the Machine A. AWA(11%) = $ Machine A $23,000 12 years $4,000 Terminal BV (and MV) Annual receipts Annual expenses Click the icon to view the interest and annuity table for discrete compounding when the MARR is 11per year. (Round to the nearest dollar.) $152,000 $130,000 Machine B $33,000 6 years $1,500 C... $197,000 $176,000
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Two alternative machines will produce the same product, but one is capable of higher-quality work, which can be expected to return greater revenue.
The following are relevant data. Determine which is the better alternative, assuming repeatability and using SL depreciation, an income-tax rate of
27%, and an after-tax MARR of 11%.
Capital investment
Life
Calculate the AW value for the Machine A.
Machine A
$23,000
12 years
$4,000
Terminal BV (and MV)
Annual receipts
Annual expenses
Click the icon to view the interest and annuity table for discrete compounding when the MARR is 11%er year.
AWA (11%) = $ (Round to the nearest dollar.)
Machine B
$33,000
6 years
$1,500
$197,000
$176,000
$152,000
$130,000
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