A concrete plant is considering a new piece of equipment with an initial cost of $75,000...

A concrete plant is considering a new piece of equipment with an initial cost of $75,000 and a salvage value of $15,000 at the end of its 25-year useful life. The annual maintenance cost for this piece of equipment is projected to be $10,500. The equipment will produce an annual labor savings of $24,000. What is the approximate projected before-tax rate of return on the equipment?

Solutions

Expert Solution

The given data is executed in an excel:

Excel IRR function is used to solve the problem.

Before-tax rate of return on the equipment = 17.76%
The excel calculation and formula used are shown below:

Comment if a handwritten solution is required
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Rahul Sunny answered 1 year ago

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