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 $209,000 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 $74,000. If the projected operating expense for b equipment is $64,000 per year, what is the after-tax equivalent uniform annual cost (EUAC) of owning and operating this equipment? The effective income tax rate is 25%, and the after-tax MARR is 11% per y 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 11% 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 $209,000 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 $74,000. If the projected operating expense for b equipment is $64,000 per year, what is the after-tax equivalent uniform annual cost (EUAC) of owning and operating this equipment? The effective income tax rate is 25%, and the after-tax MARR is 11% per y 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 11% per year.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Use tables to answer question

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 $209,000 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 $74,000. If the projected operating expense for the
equipment is $64,000 per year, what is the after-tax equivalent uniform annual cost (EUAC) of owning and operating this equipment? The effective income tax rate is 25%, and the after-tax MARR is 11% 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 11% per year.
The after-tax equivalent uniform annual cost is $ (Round to the nearest dollar.)
More Info
GDS Recovery Rates (k)
5-year Property Class
0.2000
0.3200
0.1920
0.1152
0.1152
0.0576
Year
1
2
3
4
5
6
Print
Done
4
C
More Info
N
1
2
3
4
5
Discrete Compounding; /= 11%
Single Payment
Compound
Amount
Factor
To Find F
Given P
FIP
1.1100
P
1.2321
1.3676
1.5181
1.6851
Present
Worth Factor
To Find P
Given F
. PIF
0.9009
0.8116
0.7312
0.6587
0.5935
Compound
Amount
Factor
To Find F
Given A
FIA
1.0000
2.1100
3.3421
4.7097
6.2278
Uniform Series
Present
Worth Factor
To Find P
Given A
PIA
0.9009
1.7125
2.4437
3.1024
3.6959
Sinking
Fund
Factor
To Find A
Given F
A/F
1.0000
0.4739
0.2992
0.2123
0.1606
Capital
Recovery
Factor
To Find A
Given P
A/P
1.1100
0.5839
0.4092
0.3223
0.2706
#
- X
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