Question
In: Economics
Man-U-Facturing Inc. will buy a machine that has a cost of $850,000 and is expected to...
Man-U-Facturing Inc. will buy a machine that has a cost of $850,000 and is expected to be useful for 10 years. At the end of the 10th year, the firm intends to sell the machine for an estimated price of $52,036. In addition, the yearly benefits are expected to be $201,952 while the annual maintenance costs are predicted to be $51,300. The company uses a 9% interest rate for this project and it is currently being taxed at a flat tax rate of 21%. This time assume that Man-U-Facturing Inc. uses straight-line depreciation. What the is the after-tax internal rate of return?
Solutions
Expert Solution
Solution :- Depreciation per year = ( Purchase Price - Salvage Value ) / Life
= ( $850,000 - $52,036 ) / 10 = $79,796.40
Net Annual Benefit = $201,952 - $51,300 = $150,652
After tax Internal Rate of Return = 10.12%
If there is any doubt please ask in comments
Thank you please rate
Rahul Sunny answered 2 years agoRelated Solutions
Man-U-Facturing Inc. will buy a machine that has a cost of $850,000 and is expected to...
Man-U-Facturing Inc. will buy a machine that has a cost of
$850,000 and is expected to be useful for 10 years. At the end of
the 10th year, the firm intends to sell the machine for an
estimated price of $52,036. In addition, the yearly benefits are
expected to be $201,952 while the annual maintenance costs are
predicted to be $51,300. The company uses a 9% interest rate for
this project and it is currently being taxed at a flat...
Man-U-Facturing Inc. will buy a machine that has a cost of $850,000 and is expected to...
Man-U-Facturing Inc. will buy a machine that has a cost of
$850,000 and is expected to be useful for 10 years. At the end of
the 10th year, the firm intends to sell the machine for an
estimated price of $52,036. In addition, the yearly benefits are
expected to be $201,952 while the annual maintenance costs are
predicted to be $51,300. The company uses a 9% interest rate for
this project and it is currently being taxed at a flat...
Man-U-Facturing Inc. will buy a machine that has a cost of $850,000 and is expected to...
Man-U-Facturing Inc. will buy a machine that has a cost of
$850,000 and is expected to be useful for 10 years. At the end of
the 10th year, the firm intends to sell the machine for an
estimated price of $52,036. In addition, the yearly benefits are
expected to be $201,952 while the annual maintenance costs are
predicted to be $51,300. The company uses a 9% interest rate for
this project and it is currently being taxed at a flat...
Man-U-Facturing Inc. will buy a machine that has a cost of $850,000 and is expected to...
Man-U-Facturing Inc. will buy a machine that has a cost of
$850,000 and is expected to be useful for 10 years. At the end of
the 10th year, the firm intends to sell the machine for an
estimated price of $52,036. In addition, the yearly benefits are
expected to be $201,952 while the annual maintenance costs are
predicted to be $51,300. The company uses a 9% interest rate for
this project and it is currently being taxed at a flat...
Man-U-Facturing Inc. will buy a machine that has a cost of $850,000 and is expected to...
Man-U-Facturing Inc. will buy a machine that has a cost of
$850,000 and is expected to be useful for 10 years. At the end of
the 10th year, the firm intends to sell the machine for an
estimated price of $52,036. In addition, the yearly benefits are
expected to be $201,952 while the annual maintenance costs are
predicted to be $51,300. The company uses a 9% interest rate for
this project and it is currently being taxed at a flat...
Man-U-Facturing Inc. will buy a machine that has a cost of $850,000 and is expected to...
Man-U-Facturing Inc. will buy a machine that has a cost of
$850,000 and is expected to be useful for 10 years. At the end of
the 10th year, the firm intends to sell the machine for an
estimated price of $52,036. In addition, the yearly benefits are
expected to be $201,952 while the annual maintenance costs are
predicted to be $51,300. The company uses a 9% interest rate for
this project and it is currently being taxed at a flat...
Man-U-Facturing Inc. will buy a machine that has a cost of $850,000 and is expected to...
Man-U-Facturing Inc. will buy a machine that has a cost of
$850,000 and is expected to be useful for 10 years. At the end of
the 10th year, the firm intends to sell the machine for an
estimated price of $52,036. In addition, the yearly benefits are
expected to be $201,952 while the annual maintenance costs are
predicted to be $51,300. The company uses a 9% interest rate for
this project and it is currently being taxed at a flat...
Carl's Construction Inc. will buy a machine that has an initial cost of $1,200,000 and is...
Carl's Construction Inc. will buy a machine that has an initial
cost of $1,200,000 and is expected to be useful for 8 years.
Several estimations have been created but the company is going to
focus on 3 main scenarios. One scenario estimates yearly benefits
of $310,000 and O&M costs of $60,000 per year with a 30% chance
of occurrence. The second scenario involves benefits of $280,000
per year and O&M costs of $70,000 annually with a 50% chance of
occurring....
Carl's Construction Inc. will buy a machine that has an initial cost of $1,200,000 and is...
Carl's Construction Inc. will buy a machine that has an initial
cost of $1,200,000 and is expected to be useful for 8 years.
Several estimations have been created but the company is going to
focus on 3 main scenarios. One scenario estimates yearly benefits
of $310,000 and O&M costs of $60,000 per year with a 30% chance
of occurrence. The second scenario involves benefits of $280,000
per year and O&M costs of $70,000 annually with a 50% chance of
occurring....
Millco, Inc., acquired a machine that cost $600,000 early in 2016. The machine is expected to...
Millco, Inc., acquired a machine that cost $600,000 early in
2016. The machine is expected to last for eighth years, and its
estimated salvage value at the end of its life is $80,000.
Required:
a. Using straight-line depreciation, calculate the
depreciation expense to be recognized in the first year of the
machine's life and calculate the accumulated depreciation after the
fifth year of the machine's life.
b. Using declining-balance depreciation at twice the
straight-line rate, calculate the depreciation expense for...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Year Cash Flow 0 −$9,700 1 5,800 2 2,500 3 3,400 &nb
- In a two – story building, an exterior column is to be designed for a service...
- Explain the use of neural networking modeling in predictive analytics. Discuss a real-life example of where...
- Boarder line and antisocial disorder are perhaps the most research personality disorder.What are the most common...
- Read at least 2 academically reviewed articles and Write an annotated bibliography paper on Master Budgeting
- Why normalization and referential integrity are important principles when designing relational databases?
- Respond to the following in a minimum of 175 words: Discuss what elements should be present...
ADVERTISEMENT