Question
In: Finance
Problem: The possibility of acquiring new machinery at a cost of $ 45,000 is being evaluated,...
Problem: The possibility of acquiring new machinery at a cost of $ 45,000 is being evaluated, which may be depreciated using the 5-year MACRS method. The machine must save $ 23,000 annually during the 5 years of its useful life and maintenance costs are estimated at $ 7,300 annually.
a) If the company is taxed at a rate of 42%, determine if the
investment meets the requirement of providing a minimum return of
12% after taxes (After-Tax analysis).Assume that at the end of its
useful life, the machine can be sold for $ 10,000
b) If the average inflation rate for the period is estimated at
3.2%, Calculate the real return on the investment after considering
inflation
Solutions
Expert Solution
Do let me know if you need any clarification regarding any step, formula or calculation.
jeff jeffy answered 2 years agoRelated Solutions
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