Two investments involving a virtual mold apparatus for producing dental crowns qualify for different property classes. Investment A has a cost of$58,500, lasts 9 years with no salvage value, and costs $150,000 per year in operating expenses. It is in the 3-year property class. Investment B has a cost of $87,500, lasts 9 years with no salvage value, and costs $125,000 per year. Investment B, however, is in the 7-year property class. The company income-tax rate is 25% and MARR is an after-tax 10%. Solve, a. Based upon the use of MACRS-GDS depreciation, compare the AW of each alternative to determine which should be selected. b. What must be Investment B’s cost of operating expenses for these two investments to be equivalent?
Two investments involving a virtual mold apparatus for producing dental crowns qualify for different property classes. Investment A has a cost of
$58,500, lasts 9 years with no salvage value, and costs $150,000 per year in operating expenses. It is in the 3-year property class. Investment B has a cost of $87,500, lasts 9 years with no salvage value, and costs $125,000 per year. Investment B, however, is in the 7-year property class. The company income-tax rate is 25% and MARR is an after-tax 10%. Solve, a. Based upon the use of MACRS-GDS
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 10 images
