If the after tax interest is 10%, what is the after tax present worth of machinery that has a first cost of $66,000 and annual savings of $7,700?

If the after tax interest is 10%, what is the after tax present worth of machinery that has a first cost of $66,000 and annual savings of $7,700? The machinery is sold for $1100 salvage value at the end of a seven year life. The corporate tax rate is 59%.

Expert Solution

Cost of Machine = $66,000

Salvage Value = $1100

Life of Asset = 7 years

Assume Depreciation as per straight line method

Dep per year = ( $66,000 - $7,000 ) / 7 = $9271.43

After tax present worth of Machine = $23,435

Rahul Sunny answered 2 years ago

The annual force of interest credited to a savings account is given by δt=t/(10+t2).Find the present...

The annual force of interest credited to a savings account is given by δt=t/(10+t2).Find the present value of $7,000 at time 3.

A project has a first cost P, annual savings A and a salvage value of $500...

A project has a first cost P, annual savings A and a salvage value of $500 at the end of its 10-year service life. It is also known that the IRR for this project is 11 %, and the payback period is 8 years. What is the project's first cost? (Don't use the $ sign and coma in your answer!)

5. Compare Present worth analysis, future worth analysis, annual worth analysis and benefit cost ratio analysis...

5. Compare Present worth analysis, future worth analysis, annual worth analysis and benefit cost ratio analysis of project evaluation.

A. The (before-tax cost of debt/after-tax cost of debt) is the interest rate that a firm...

A. The (before-tax cost of debt/after-tax cost of debt) is the interest rate that a firm pays on any new debt financing. B. Perpetualcold Refrigeration Company (PRC) can borrow funds at an interest rate of 11.10% for a period of four years. Its marginal federal-plus-state tax rate is 45%. PRC’s after-tax cost of debt is (6.11%/7.03%/5.80%/6.72%) (rounded to two decimal places). C. At the present time, Perpetualcold Refrigeration Company (PRC) has 10-year noncallable bonds with a face value of $1,000...

Question 11 pts The interest rate at which the present worth and the equivalent uniform annual...

Question 11 pts The interest rate at which the present worth and the equivalent uniform annual worth are equal to 0 is called the internal rate of return. True False Question 21 pts To determine the internal rate of return, you can calculate net present worth at varying interests and select the interest rate where NPW = 0. True False Question 31 pts If the internal rate of return of a project is less than your MARR, then the project...

What is the future worth at year 3 if the annual savings are $12,000,000 per year?

A huge worldwide retailer has made cyber security changes to help prevent financial liabilities and identity theft. The changes are estimated to result in legal and customer service savings each year for 3 years. The company’s time value of money is 6% per year.What is the future worth at year 3 if the annual savings are $12,000,000 per year?

Determine the breakeven (based on net present worth) initial cost for a project with an interest...

Determine the breakeven (based on net present worth) initial cost for a project with an interest rate of 6% and a useful life of 14 years with the following data: Annual Cost (O&M): $7,500/ year with an annual increase of $800/ year Annual Revenue = $9,000/ year with an annual increase of $1,000/ year Salvage Value: $50,000

What is the net present value of Project X if it has the following after tax...

What is the net present value of Project X if it has the following after tax cash flows? The interest rate is 6% End of year 1 = ($300) End of year 2 = $500 End of year 3 = $900 Please show equation that is easy to understand, able to put into TI-84.

Assume a 10% annual interest rate. (i) What is the present value of a 25 year,...

Assume a 10% annual interest rate. (i) What is the present value of a 25 year, $900 annuity if the first payment does not occur until 7 years from today? (ii) What would be the present value of a perpetuity with the same characteristics ($900, first payment in 7 six years).

Perform a present worth (PW)-based evaluation of the two alternatives below using a spreadsheet. The after-tax...

Perform a present worth (PW)-based evaluation of the two alternatives below using a spreadsheet. The after-tax minimum acceptable rate of return (MARR) is 8% per year, Modified Accelerated Cost Recovery System (MACRS) depreciation applies, and Te = 40%. The (GI - OE) estimate is made for the first 3 years; it is zero in year 4 when each asset is sold. Alternative X Y First Cost, $ –8,000 –13,000 Salvage Value, Year 4, $ 0 2,000 GI-OE, $ per Year...

Question