Your company has just signed a three-year nonrenewable contract with the city of New Orleans for earthmoving work. You are investigating the purchase of heavy construction equipment for this job. The equipment costs $191,000 and qualifies for five-year MACRS depreciation. At the end of three-year contract, you expect to be able to sell the equipment for $79,000. If the projected operating expense for the equipment is $60,000 per year what is the after-tax equivalent uniform annual cost (EUAC) of owning and operating this equipment? The effective income tax rate is 24%, and the after-tax MARR is 15% per year. Click the icon to view the GDS Recovery Rates (r) for the 5-year property class. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 15% per year.
Your company has just signed a three-year nonrenewable contract with the city of New Orleans for earthmoving work. You are investigating the purchase of heavy construction equipment for this job. The equipment costs $191,000 and qualifies for five-year MACRS depreciation. At the end of three-year contract, you expect to be able to sell the equipment for $79,000. If the projected operating expense for the equipment is $60,000 per year what is the after-tax equivalent uniform annual cost (EUAC) of owning and operating this equipment? The effective income tax rate is 24%, and the after-tax MARR is 15% per year. Click the icon to view the GDS Recovery Rates (r) for the 5-year property class. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 15% per year.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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
Transcribed Image Text:Your company has just signed a three-year nonrenewable contract with the city of New Orleans for earthmoving work. You are investigating the
purchase of heavy construction equipment for this job. The equipment costs $191,000 and qualifies for five-year MACRS depreciation. At the end of the
three-year contract, you expect to be able to sell the equipment for $79,000. If the projected operating expense for the equipment is $60,000 per year,
what is the after-tax equivalent uniform annual cost (EUAC) of owning and operating this equipment? The effective income tax rate is 24%, and the
after-tax MARR is 15% per year.
Click the icon to view the GDS Recovery Rates (r) for the 5-year property class.
Click the icon to view the interest and annuity table for discrete compounding when the MARR is 15% per year.
The after-tax equivalent uniform annual cost is $ (Round to the nearest dollar.)

Transcribed Image Text:More Info
Year
1
2
3
4
5
6
GDS Recovery Rates (rk)
5-year Property Class
0.2000
0.3200
0.1920
0.1152
0.1152
0.0576
- X
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