Engineering Economy (17th Edition)
17th Edition
ISBN: 9780134870069
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
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Chapter 13, Problem 8P
a.
To determine
The better alternative by comparing after tax equivalent with income tax rate of 25%.
b.
To determine
The better alternative by comparing before tax equivalent annual cost by using the information on annual cost of operations without a truck.
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BlastCo Analytics needs to purchase a new metal shaper. BlastCo's after tax MARR is 12% and the
corporate tax rate is 54%. A metal shaper is a CCA Class 8 asset. The remaining data are contained in
the table below.
Model
Flex
First Cost
Economic Life Annual Net
(Years)
Savings
$100,000 5
Blender $120,000 5
Flextastic $200,000 5
$50,000
$55,000
$75,000
Salvage
Value
$20,000
$25,000
$100,000
BlastCo Analytics needs to purchase a new metal shaper. BlastCo’s after-tax MARR is 12% and the corporate tax rate is 54%. A metal shaper is a CCA Class 8 asset. The remaining data are contained in the table below.
Model
First Cost
Economic Life (Years)
Annual Net Savings
Salvage Value
Flex
$100,000
5
$50,000
$20,000
Blender
$120,000
5
$55,000
$25,000
Flextastic
$200,000
5
$75,000
$100,000
(a) Using the annual worth method, which model should BlastCo buy?(b) What is the approximate after tax IRR of each model?(c) What is the exact after tax IRR of each model?
Note:-
Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
Answer completely.
You will get up vote for sure.
A new municipal refuse collection vehicle can be purchased for $84,000. Itsexpected useful life is six years, at which time the market value and book value will be zero. Before-tax cash flow (BTCF) will be +$18,000 per year over the six-year life of the vehicle. Solve, a. Use straight-line depreciation, an effective income tax rate of 40% and an after-tax MARR of 12% to determine the present worth of the investment. b. What is the after-tax internal rate of return? c. Is this vehicle a sound investment? Explain your answer.
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Engineering Economy (17th Edition)
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- BlastCo Analytics needs to purchase a new metal shaper. BlastCo's after-tax MARR is 12% and the corporate tax rate is 54%. A metal shaper is a CCA Class 8 asset. The remaining data are contained in the table below. Model Flex First Cost Economic Life (Years) Annual Net Salvage Savings Value $50,000 $100,000 5 $20,000 Blender $120,000 5 $55,000 $25,000 Flextastic $200,000 5 $75,000 $100,000 (a) Using the annual worth method, which model should BlastCo buy? (b) What is the approximate after tax IRR of each model? (c) What is the exact after tax IRR of each model?arrow_forwardEngineering Economicsarrow_forwardEngineering Economics problem. Help me for the solutionarrow_forward
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