Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 10, Problem 11P
To determine
Calculate the
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A corporation bought land for $500,000, built a
$1,000,000 farm building, and installed $700,000
worth of agricultural equipment. The plant was
completed and operation begun on April 1. Yearly
revenue for the project is expected to be $750,000
with expenses of $500,000. If the firm used
MACRS for depreciation and pays taxes at the
corporate rate what is the after-tax cash flow for
this project in each year of the equipment's useful
life? Calculate the present worth of the equipment
if the company's MARR is 9 percent (ignore the
value of the farm building).
The Shell Corporation has a 34% tax rate and owns a piece of petroleum-drilling
equipment that costs $119,000 and will be depreciated at a CCA rate of 30%. Shell will
lease the equipment to others and each year receive $33,100 in rent. At the end of
five years, the firm will sell the equipment for $31,600. All values are presented in
today's dollars.
Calculate the overall present worth of these cash flows with tax effects if market
interest rate is 10% and annual inflation rate is 2%.
(Note: Don't use the $ sign in your answer and round it up to 2 decimal
places)
Your company has purchased equipment (for $53,000) that will reduce materials and labor costs by $16,000 each year for N years. After N years, there will be no further need
for the machine, and because the machine is specially designed, it will have no MV at any time. The IRS, however, has ruled that you must depreciate the equipment on a SL
basis with a tax life of five years. If the effective income tax rate is 23%, what is the minimum number of years your firm must operate the equipment to earn 10% per year
after taxes on its investment?
Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year.
Chapter 10 Solutions
Contemporary Engineering Economics (6th Edition)
Ch. 10 - Prob. 1PCh. 10 - Prob. 2PCh. 10 - Prob. 3PCh. 10 - Prob. 4PCh. 10 - Prob. 5PCh. 10 - Prob. 6PCh. 10 - Prob. 7PCh. 10 - Prob. 8PCh. 10 - Prob. 9PCh. 10 - Prob. 10P
Ch. 10 - Prob. 11PCh. 10 - Prob. 12PCh. 10 - Prob. 13PCh. 10 - Prob. 14PCh. 10 - Prob. 15PCh. 10 - Prob. 16PCh. 10 - Prob. 17PCh. 10 - Prob. 18PCh. 10 - Prob. 19PCh. 10 - Prob. 20PCh. 10 - Prob. 21PCh. 10 - Prob. 22PCh. 10 - Prob. 23PCh. 10 - Prob. 24PCh. 10 - Prob. 25PCh. 10 - Prob. 26PCh. 10 - Prob. 27PCh. 10 - Prob. 28PCh. 10 - Prob. 29PCh. 10 - Prob. 30PCh. 10 - Prob. 31PCh. 10 - Prob. 32PCh. 10 - Prob. 33PCh. 10 - Prob. 34PCh. 10 - Prob. 35PCh. 10 - Prob. 36PCh. 10 - Prob. 37PCh. 10 - Prob. 1STCh. 10 - Prob. 2STCh. 10 - Prob. 3STCh. 10 - Prob. 4STCh. 10 - Prob. 5ST
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