ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Chapter 13, Problem 50P
(a)
To determine
Time 0 ATCFs for existing asset and new asset.
(a)
Expert Solution
Answer to Problem 50P
Time 0 ATCF for existing asset is $28,875.
Time 0 ATCF for new asset is $76,500.
Explanation of Solution
Old asset
New asset
New asset is entitled to 10% investment tax credit, hence ATCF at Time 0 for new asset will be as follows:
(b)
To determine
Time 0 ATCFs for existing asset and new asset if present market value of existing asset is $25,500.
(b)
Expert Solution
Answer to Problem 50P
Time 0 ATCF for existing asset is $25,500.
Time 0 ATCF for new asset is $76,500.
Explanation of Solution
Old asset
Book Value as at today =
= $25500
New asset New asset is entitled to 10% investment tax credit, hence ATCF at Time 0 for new asset will be as follows:
(c)
To determine
Time 0 ATCFs for existing asset and new asset if present market value of existing asset is $18,000.
(c)
Expert Solution
Answer to Problem 50P
Time 0 ATCF for existing asset is $19,875.
Time 0 ATCF for new asset is $76,500.
Explanation of Solution
Old asset
New asset New asset is entitled to 10% investment tax credit, hence ATCF at Time 0 for new asset will be as follows:
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Chapter 13 Solutions
ENGR.ECONOMIC ANALYSIS
Ch. 13 - Prob. 1QTCCh. 13 - Prob. 2QTCCh. 13 - Prob. 3QTCCh. 13 - Prob. 4QTCCh. 13 - Prob. 5QTCCh. 13 - Prob. 1PCh. 13 - Prob. 2PCh. 13 - Prob. 3PCh. 13 - Prob. 4PCh. 13 - Prob. 5P
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