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.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question
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: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.)
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
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
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 2 images

Blurred answer
Knowledge Booster
Assets
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education