Engineering Economy (16th Edition) - Standalone book
16th Edition
ISBN: 9780133439274
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 7, Problem 20P
To determine
Calculate the present worth.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
A start-up biotech company is considering making an investment of $100,000 in a new filtration system. The associate
estimates are summarized below:
Annual receipts $75,000
Annual expenses $45,000
Useful life 8 years
Terminal book value (EOY 8) $20,000
Terminal market value $0
Straight-line depreciation will be used, and the effective income tax rate is 20%. The after-tax MARR is 15% per year.
Determine whether this investment is an attractive option for the company.
A start-up biotech company is considering making an investment of $100,000 in a new filtration system. The associated estimates are summarized below:
Annual receipts $75,000
Annual expenses $45,000
Useful life 8 years
Terminal book value (EOY 8) $20,000
Terminal market value $0
Straight-line depreciation will be used, and the effective income tax rate is 20%. The after-tax MARR is 15% per year. Determine whether this investment is an attractive option for the company.
A firm can purchase a centrifugal separator (5-year MACRS property) for
$22,000.
The estimated salvage value is
$4,000
after a useful life of six years. Operating and maintenance (O&M) costs for the first year are expected to be
$2,200.
These O&M costs are projected to increase by
$1,000
per year each year thereafter. The income tax rate is
24%
and the MARR is
11%
after taxes. What must the uniform annual benefits be for the purchase of the centrifugal separator to be economical on an after-tax basis?
Chapter 7 Solutions
Engineering Economy (16th Edition) - Standalone book
Ch. 7 - How are depreciation deductions different from...Ch. 7 - Prob. 2PCh. 7 - Explain the difference between real and personal...Ch. 7 - Prob. 4PCh. 7 - Prob. 5PCh. 7 - Prob. 6PCh. 7 - Prob. 7PCh. 7 - Prob. 8PCh. 7 - Prob. 9PCh. 7 - Prob. 10P
Ch. 7 - Prob. 11PCh. 7 - Prob. 12PCh. 7 - Prob. 13PCh. 7 - Prob. 14PCh. 7 - A manufacturer of aerospace products purchased...Ch. 7 - Prob. 16PCh. 7 - Prob. 17PCh. 7 - Prob. 18PCh. 7 - Prob. 19PCh. 7 - Prob. 20PCh. 7 - Prob. 21PCh. 7 - Prob. 22PCh. 7 - Prob. 23PCh. 7 - Prob. 24PCh. 7 - Prob. 25PCh. 7 - Prob. 26PCh. 7 - Prob. 27PCh. 7 - Prob. 28PCh. 7 - Prob. 29PCh. 7 - Prob. 30PCh. 7 - Prob. 31PCh. 7 - Prob. 32PCh. 7 - Prob. 33PCh. 7 - Prob. 34PCh. 7 - Prob. 35PCh. 7 - Prob. 36PCh. 7 - Prob. 37PCh. 7 - Prob. 38PCh. 7 - Prob. 39PCh. 7 - Prob. 40PCh. 7 - Prob. 41PCh. 7 - Prob. 42PCh. 7 - Prob. 43PCh. 7 - Prob. 44PCh. 7 - Prob. 45PCh. 7 - Prob. 46PCh. 7 - Prob. 47PCh. 7 - Prob. 48PCh. 7 - Prob. 49PCh. 7 - Prob. 50PCh. 7 - Prob. 51PCh. 7 - Prob. 52PCh. 7 - Determine the after-tax yield (i.e., IRR on the...Ch. 7 - A 529-state-approved Individual Retirement Account...Ch. 7 - Prob. 55PCh. 7 - Prob. 56PCh. 7 - Prob. 57SECh. 7 - Prob. 58SECh. 7 - Prob. 59SECh. 7 - Prob. 60SECh. 7 - Prob. 61FECh. 7 - Prob. 62FECh. 7 - Prob. 63FECh. 7 - Prob. 64FECh. 7 - Prob. 65FECh. 7 - Prob. 66FECh. 7 - Prob. 67FECh. 7 - Prob. 68FECh. 7 - Prob. 69FECh. 7 - Prob. 70FECh. 7 - Prob. 71FECh. 7 - Prob. 72FECh. 7 - Prob. 73FECh. 7 - Prob. 74FECh. 7 - Prob. 75FECh. 7 - If the federal income tax rate is 35% and the...Ch. 7 - Prob. 77FECh. 7 - Prob. 78FECh. 7 - Prob. 79FECh. 7 - Prob. 80FECh. 7 - Prob. 81FECh. 7 - Prob. 82FECh. 7 - Prob. 83FECh. 7 - Prob. 84FE
Knowledge Booster
Similar questions
- find AWx(10%) and AWy(10%)arrow_forwardH8. A piece of equipment has a capital investment of $1,140,000 and an annual operating expense of $115,500. The life of the equipment is 10 years, the effective income tax rate is 40%, and the after-tax MARR is 9% per year. The equipment qualifies for seven-year MACRS (GDS) properties. Perform after-tax PW analysis.arrow_forwardI need help with this problem and the answer is not 37.40, 26.93, and 86.2.arrow_forward
- An organization completes the purchase of new asset at a cost of $25,000. It has an yearly operating cost of $3,000 for delivery and installation It has a depreciable life of six (6) years at the end of which the salvage value will be $3,000 Utilizing 200% Declining Balance (DB) only, complete the table below If a returm on investment (rate of return) of 10% is requred, what is the minimum annual saving in needed? If the service life is decreased from six (6) years to five (5) years, what is the minimum annual savings for the firm to acheive a 10% return on investment? If the annual operating cost increase by 109%, what will be the minimum annual savings needed? Round all answers up the the nearest dollar (i.e. $2.322 = $3.00)arrow_forwardA company is evaluating the addition of equipment to its present operations. They need to purchase equipment for $160,000. The five year MACRS GDS Recovery Method is appropriate for the investment and the total tax rate (federal plus state) is 40%. Gross revenue is expected to be $30,000/year while maintenance costs are expected to be $5,000/year. It is expected that the operation will be shut down at the end of the fourth year with a salvage value of $20,000. a- Draw a BTCFD b- Prepare a table showing your development of the ATCF's. c- If the company's aftertax MARRis 12%/year, is this a profitable investment?arrow_forwardhas a cost of $53,600, lasts 9 years with no salvage value, and costs $150,000 per year in operating expenses. It is in the 3-year property class. Investment B has a cost of $84,500.00, lasts 9 years with no salvage value, and costs $125,000 per year. Investment B, however, is in the 7-year property class. The company marginal tax rate is 25%, and MARR is an after-tax 10%. Based upon the use of MACRS-GDS depreciation, compare the AW of each alternative.AWA = $enter a dollar amount AWB = $enter a dollar amount Which should be selected? What must be Investment B's cost of operating expenses for these two investments to be equivalent? $enter a dollar amountarrow_forward
- complete answer, thank you.arrow_forward7arrow_forwardBC Junction purchased some embroidering equipment for their Denver facility 3 years ago for $15,000. This equipment qualified as MACRS 5-year property. Maintenance costs are estimated to be $1000 this next year and will increase by $1000 per year thereafter. The market (salvage) value for the equipment is $10,000 at the end of this year and declines by $1000 per year in the future. If BC Junction has an after-tax MARR of 30%, a marginal tax rate of 28% on ordinary income, depreciation recapture, and losses, what aftertax life of this previously purchased equipment has the lowest EUAC?arrow_forward
- A broadcasting corporation was formed duly approved by the Securities and Exchange Commission has a working capital of P20M and a fixed capital or P80M. Annual depreciation amounts to P5M and the expected annual profit is P16M. Compute the payout period in years. Select the correct response: 2.51 5.11 3.81 4.33arrow_forwardAn existing robot can be kept if $2,000 is spent now to upgrade it for future service requirements. Alternatively, the company can purchase a new robot to replace the old robot. The following estimates have been developed for both the defender and challenger. The company?s before-tax MARR is 20% per year. Based on this information, should the existing robot be replaced right now? Assume the robot will be needed for an indefinite period of time. (Hint: Use the AW method)arrow_forwardAcme Manufacturing makes their preliminary economic studies using a before-tax MARR of22%. More detailed studies are performed on an after-tax basis. If their effective tax rate is23%, what is the after-tax MARR? Choose the correct answer below. A. The after-tax MARR is16.94%. B. The after-tax MARR is4.04%. C. The after-tax MARR is5.06%. D. The after-tax MARR is19.29%.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial Economics: Applications, Strategies an...EconomicsISBN:9781305506381Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. HarrisPublisher:Cengage Learning
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning