Engineering Economy (17th Edition)
17th Edition
ISBN: 9780134870069
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
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Question
Chapter 9, Problem 14P
To determine
Calculate the equivalent annual value.
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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)
A contractor is considering the purchase of a set
of machine tools at a cost of $50,000. The
purchase is expected to generate profits of
$19,000 (revenues less expenses) per year in
each of the next 4 years Additional profits will be
taxed at a rate of 40%. The asset is depreciated
by straight-line method with zero salvage value.
The contractor's real after-tax MARR is 10%
(25%)
1). What is the PW of this investment? Should the
contractor purchase the machine tools?
2). What is the PW of this investment if the general
inflation is 3% in the 4 year period? Should the
contractor purchase the machine tools?
In year 0 you purchase an asset for $500,000 and in year 1 you receive a positive cash flow of
s100,000 from operating the asset. Following a MACRS 7-year depreciation schedule (year 1
recovery rate of 14.29 percent) and assuming you are in a 39% tax bracket, what is your year 1
after tax cash flow (ATCF) to the nearest $50 ?
a)
$400,000
b) $28,550
c)
$11,250
d)
$88,750
e)
$380,750
Chapter 9 Solutions
Engineering Economy (17th Edition)
Ch. 9 - Prob. 1PCh. 9 - Prob. 2PCh. 9 - Prob. 3PCh. 9 - Prob. 4PCh. 9 - Prob. 5PCh. 9 - Prob. 6PCh. 9 - Prob. 7PCh. 9 - A city water and waste-water department has a...Ch. 9 - Prob. 9PCh. 9 - Prob. 10P
Ch. 9 - Prob. 11PCh. 9 - Prob. 12PCh. 9 - Use the PW method to select the better of the...Ch. 9 - Prob. 14PCh. 9 - Prob. 15PCh. 9 - Prob. 16PCh. 9 - Prob. 17PCh. 9 - Prob. 18PCh. 9 - Prob. 19PCh. 9 - Prob. 20PCh. 9 - Prob. 21PCh. 9 - Prob. 22PCh. 9 - Prob. 23PCh. 9 - Prob. 24PCh. 9 - Prob. 25PCh. 9 - Prob. 26PCh. 9 - Prob. 27SECh. 9 - Prob. 28SECh. 9 - Prob. 29CSCh. 9 - Prob. 30CSCh. 9 - Prob. 31CSCh. 9 - Prob. 32FECh. 9 - Prob. 33FECh. 9 - Prob. 34FECh. 9 - Prob. 35FECh. 9 - Prob. 36FE
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