You are evaluating two different aluminum milling machines. The Alumina I costs $240,000, has a three-year...

You are evaluating two different aluminum milling machines. The Alumina I costs $240,000, has a three-year life, and has pretax operating costs of $63,000 per year. The Alumina II costs $420,000, has a five-year life, and has pretax operating costs of $36,000 per year. For both milling machines, use straight-line depreciation to zero over the project's life and assume a salvage value of $40,000. If your tax rate is 35 percent and your discount rate is 10 percent, which do you prefer? Why?

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Expert Solution

jeff jeffy answered 2 months ago

2) You are evaluating two different aluminum milling machines. The Alumina I costs $240,000, has a...

2) You are evaluating two different aluminum milling machines. The Alumina I costs $240,000, has a three-year life, and has pretax operating costs of $63,000 per year. The Alumina II costs $420,000, has a five-year life, and has pretax operating costs of $36,000 per year. For both milling machines, use straight-line depreciation to zero over the project's life and assume a salvage value of $40,000. If your tax rate is 35 percent and your discount rate is 10 percent, which...

Show all steps and equations. 2) You are evaluating two different aluminum milling machines. The Alumina...

Show all steps and equations. 2) You are evaluating two different aluminum milling machines. The Alumina I costs $240,000, has a three-year life, and has pretax operating costs of $63,000 per year. The Alumina II costs $420,000, has a five-year life, and has pretax operating costs of $36,000 per year. For both milling machines, use straight-line depreciation to zero over the project's life and assume a salvage value of $40,000. If your tax rate is 35 percent and your discount...

You are evaluating two different milling machines. The Techron I costs 210,000, has a three year...

You are evaluating two different milling machines. The Techron I costs 210,000, has a three year life, and pretax operating costs of 34,000 per year. The Techron II costs 320,000, lasts five years, and has pretax operating costs of 23,000 per year. Assume both machines can be depreciated using the straight-line method and both machines will have a salvage value of 20,000. The company tax rate is 35% and the discount rate is 12%. Which machine should you purchase?

You are evaluating two machines. Machine I costs $240,000 and it has a three-year life. It...

You are evaluating two machines. Machine I costs $240,000 and it has a three-year life. It has pre-tax operating costs of $60,000 per year. Machine II costs $450,000 and it has a five-year life. It has pre-tax operating costs of $40,000 per year. For both machines, we use straight-line depreciation to zero over the machine’s life. The pre-tax salvage value of Machine I is $50,000 at the end of its life. The pre-tax salvage value of Machine II is $150,000...

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You are evaluating two different silicon wafer milling machines. Machine I costs $120,000, has a 3-year life, and has pretax operating costs of $43,000 per year. Machine II costs $160,000, has a 5-year life, and has pretax operating costs of $20,000 per year. For both machines, use straight-line depreciation to zero over the project's life and assume a salvage value of $20,000. If your tax rate is 34 percent and your discount rate is 12 percent, which one do you...

You are evaluating two different silicon wafer milling machines. The Techron I costs $267,000, has a...

You are evaluating two different silicon wafer milling machines. The Techron I costs $267,000, has a three-year life, and has pretax operating costs of $72,000 per year. The Techron II costs $465,000, has a five-year life, and has pretax operating costs of $45,000 per year. For both milling machines, use straight-line depreciation to zero over the project’s life and assume a salvage value of $49,000. If your tax rate is 23 percent and your discount rate is 13 percent, compute...

You are evaluating two different silicon wafer milling machines. The Techron I costs $273,000, has a...

You are evaluating two different silicon wafer milling machines. The Techron I costs $273,000, has a 3-year life, and has pretax operating costs of $74,000 per year. The Techron II costs $475,000, has a 5-year life, and has pretax operating costs of $47,000 per year. For both milling machines, use straight-line depreciation to zero over the project’s life and assume a salvage value of $51,000. If your tax rate is 25 percent and your discount rate is 11 percent, compute...

You are evaluating two different silicon wafer milling machines. The Techron I costs $255,000, has a...

You are evaluating two different silicon wafer milling machines. The Techron I costs $255,000, has a three-year life, and has pretax operating costs of $68,000 per year. The Techron II costs $445,000, has a five-year life, and has pretax operating costs of $41,000 per year. For both milling machines, use straight-line depreciation to zero over the project’s life and assume a salvage value of $45,000. If your tax rate is 24 percent and your discount rate is 13 percent, compute...

You are evaluating two different silicon wafer milling machines. The Techron I costs $231,000, has a...

You are evaluating two different silicon wafer milling machines. The Techron I costs $231,000, has a three-year life, and has pretax operating costs of $60,000 per year. The Techron II costs $405,000, has a five-year life, and has pretax operating costs of $33,000 per year. For both milling machines, use straight-line depreciation to zero over the project’s life and assume a salvage value of $37,000. If your tax rate is 23 percent and your discount rate is 9 percent, compute...

You are evaluating two different silicon wafer milling machines. The Techron I costs $276,000, has a...

You are evaluating two different silicon wafer milling machines. The Techron I costs $276,000, has a 3-year life, and has pretax operating costs of $75,000 per year. The Techron II costs $480,000, has a 5-year life, and has pretax operating costs of $48,000 per year. For both milling machines, use straight-line depreciation to zero over the project’s life and assume a salvage value of $52,000. If your tax rate is 21 percent and your discount rate is 12 percent, compute...

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