Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 10, Problem 7P
To determine
Calculate the net cash flow.
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Dog Up! Franks is looking at a new sausage system with an installed cost of $520,000.
This cost will be depreciated straight-line to zero over the project's five-year life, at the
end of which the sausage system can be scrapped for $83,000. The sausage system will
save the firm $154,000 per year in pretax operating costs, and the system requires an
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discount rate is 11 percent, what is the NPV of this project? (Do not round intermediate
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An injection molding machine can be purchased and installed for $60,000. It is in the seven-year GDS property class and is expected to be kept in service for eight years. It is believed that $11,000 can be obtained when the machine is disposed of at the end of
year eight. The net annual value added (i.e., revenues less expenses) that can be attributed to this machine is constant over eight years and amounts to $12,000. An effective income tax rate of 22% is used by the company, and the after-tax MARR equals 15%
per year.
Click the icon to view the GDS Recovery Rates (*) for the 7-year property class.
a. What is the approximate value of the company's before-tax MARR?
The before-tax MARR is 19%. (Round to the nearest whole number.)
b. Determine the GDS depreciation amounts in years one through eight. (Round to the nearest dollar.)
c. What is the taxable income at the end of year eight that is related to capital investment?
The taxable income at the end of year eight is $ 11000. (Round to…
A company considers introducing a new newspaper. Its direct competitor charges $0.25 at retail. The fixed cost charges to be $350,000 per month. The variable cost is $0.08 per copy, but advertising revenues of $0.05 per paper will be generated. To print the morning paper, the publisher has to purchase a new printing press, which will cost $620,000. The press machine will be depreciated according to a seven-year MACRS class. The press machine will be used for 10 years, at which time its salvage value would be about $100,000. Assume 365 issues per year, a 27% tax rate, and a 13% MARR. How many copies per day must be sold to break even at a retail selling price of $0.20 per paper?
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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