Question
In: Finance
A manufacturer of fabricated metal products has acquired a new plasma table for $37,000. It is...
A manufacturer of fabricated metal products has acquired a new plasma table for $37,000. It is projected that the acquisition of this equipment will increase revenue by $10,000 per year. Operating costs for the machine will average $2,600 per year. The machine will be depreciated using the MACRS method, with a recovery period of 7 years. The company uses an after-tax MARR rate of 10% and has an effective tax rate of 30%.
2. Now, suppose that the duration of the project is six years and that an estimate of the value of the equipment cannot be obtained from the marketplace.
2.1. Estimate the SV value at the end of the project period using the appropriate technique. In subsequent parts, assume the estimated SV is $12,000, regardless of the result that you actually obtained.
Solutions
jeff jeffy answered 2 years agoRelated Solutions
A manufacturer of fabricated metal products has acquired a new plasma table for $37,000. It is...
A manufacturer of fabricated metal products has acquired a new
plasma table for $37,000. It is projected that the acquisition of
this equipment will increase revenue by $10,000 per year. Operating
costs for the machine will average $2,600 per year. The machine
will be depreciated using the MACRS method, with a recovery period
of 7 years. The company uses an after-tax MARR rate of 10% and has
an effective tax rate of 30%.
2. Now, suppose that the duration of...
A manufacturer of fabricated metal products has acquired a new plasma table for $37,000. It is...
A manufacturer of fabricated metal products has acquired a new
plasma table for $37,000. It is projected that the acquisition of
this equipment will increase revenue by $10,000 per year. Operating
costs for the machine will average $2,600 per year. The machine
will be depreciated using the MACRS method, with a recovery period
of 7 years. The company uses an after-tax MARR rate of 10% and has
an effective tax rate of 30%.
What conclusion can be drawn by comparing...
A manufacturer of fabricated metal products has acquired a new plasma table for $37,000. It is...
A manufacturer of fabricated metal products has acquired a new
plasma table for $37,000. It is projected that the acquisition of
this equipment will increase revenue by $10,000 per year. Operating
costs for the machine will average $2,600 per year. The machine
will be depreciated using the MACRS method, with a recovery period
of 7 years. The company uses an after-tax MARR rate of 10% and has
an effective tax rate of 30%.
2. Now, suppose that the duration of...
A manufacturer of fabricated metal products has acquired a new plasma table for $37,000. It is...
A manufacturer of fabricated metal products has acquired a new
plasma table for $37,000. It is projected that the acquisition of
this equipment will increase revenue by $10,000 per year. Operating
costs for the machine will average $2,600 per year. The machine
will be depreciated using the MACRS method, with a recovery period
of 7 years. The company uses an after-tax MARR rate of 10% and has
an effective tax rate of 30%.
2. Now, suppose that the duration of...
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A division of Raytheon owns a 5-year-old turret lathe used to manufacture fabricated metal products that...
A division of Raytheon owns a 5-year-old turret lathe used to
manufacture fabricated metal products that was purchased for
$96,000 and now has a financial reporting (non-tax) book value of
$24,000. It has been depreciated for tax purposes as MACRS-GDS
7-year property. It has a current market value of $18,000. The
expected decline in market value is $3,000 per year from this point
forward to a minimum of $3,000. O&M costs are $8,000 per year.
Additional capability is needed. If...
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