Question
In: Economics
An auto-part manufacturing company is considering the purchase of an industrial robot to do spot welding,...
An auto-part manufacturing company is considering the purchase of an industrial robot to do spot welding, which is currently done by skilled labor. The initial cost of the robot is $250,000, and the annual labor savings are projected to be $125,000. If purchased, the robot will be depreciated under MACRS as a seven-year recovery property. This robot will be used for five years after which the firm expects to sell it for $50,000. The company's marginal tax rate is 25% over the project period. Suppose that the project requires a $30,000 investment in working capital at the beginning of the project and the entire amount will be recovered at the end of project life. Determine the net after-tax cash flows for each period over the project life. Assume MARR equals= 15%
Solutions
Rahul Sunny answered 1 year agoRelated Solutions
An auto-part manufacturing company is considering the purchase of an industrial robot to do spot welding,...
An auto-part manufacturing company is considering the purchase
of an industrial robot to do spot welding, which is currently done
by skilled labor. The initial cost of the robot is $300 comma
000, and the annual labor savings are projected to be $150 comma
000. If purchased, the robot will be depreciated under MACRS as a
seven-year recovery property. This robot will be used for five
years after which the firm expects to sell it for $70 comma 000.
The...
An auto-part manufacturing company is considering the purchase of an industrial robot to do spot welding,...
An auto-part manufacturing company is considering the purchase
of an industrial robot to do spot welding, which is currently done
by skilled labor. The initial cost of the robot is $250,000, and
the annual labor savings are projected to be $125,000. If
purchased, the robot will be depreciated under MACRS as a
seven-year recovery property. This robot will be used for five
years after which the firm expects to sell it for $50,000. The
company’s marginal tax rate is 25%...
An automobile-manufacturing company is considering purchasing an industrial robot to do spot welding, which is currently...
An automobile-manufacturing company is considering purchasing
an industrial robot to do spot welding, which is currently done by
skilled labor. The initial cost of the robot is
$280000 and the annual labor savings are projected to be
$178672. If purchased, the robot will be depreciated under MACRS
as a five-year recovery property. The robot will be used for
seven years, at the end of which time, the firm expects to sell
it for $51000.The company's marginal tax rate is 26%over...
An industrial engineer is considering two robots for purchase by a fiber optic manufacturing company. Robot...
An industrial engineer is considering two robots for purchase by
a fiber optic manufacturing company. Robot X will have a first cost
of $125,000, an annual maintenance and operation (M&O) cost of
$40,000, and a $60,000 salvage value. Robot Y will have a first
cost of $145,000, an annual M&O cost of $33,000, and a $65,000
salvage value. Which should be selected on the basis of an annual
worth comparison of 9% per year? Use a 3-year study period.
Interest...
Kanye Company is evaluating the purchase of a rebuilt spot-welding machine to be used in the...
Kanye Company is evaluating the purchase of a rebuilt
spot-welding machine to be used in the manufacture of a new
product. The machine will cost $179,000, has an estimated useful
life of 7 years, a salvage value of zero, and will increase net
annual cash flows by $39,222.
McKnight Company is considering two different, mutually
exclusive capital expenditure proposals. Project A will cost
$519,277, has an expected useful life of 12 years, a salvage value
of zero, and is expected...
Kanye Company is evaluating the purchase of a rebuilt spot-welding machine to be used in the...
Kanye Company is evaluating the purchase of a rebuilt
spot-welding machine to be used in the manufacture of a new
product. The machine will cost $175,000, has an estimated useful
life of 7 years, a salvage value of zero, and will increase net
annual cash flows by $33,612
What is its approximate internal rate of return?
A car parts manufacturing company is considering investing in the development of a new robot. The...
A car parts manufacturing company is considering investing in
the development of a new robot. The new robot is based on a new
technology, so there is some uncertainty associated with its
performance level. They estimated that the new robot may exhibit
high, medium, and low performance levels with the probabilities of
0.35, 0.55, and 0.10 respectively. The annual savings corresponding
to high, medium, and low performance levels are $500 000, $250 000,
and $125 000 respectively. The development cost...
A company is considering the purchase of an industrial laser for $150,000. The device has a...
A company is considering the purchase of an industrial laser for
$150,000. The device has a useful life of five years and a salvage
(market) value of $30,000 at the end of those five years. The
before-tax cash flow is estimated to be $45,000 per year. The laser
would be depreciated using MACRS with a recovery period of three
years. If the effective income tax is 25% and the after-tax MARR is
15%, use the PW method on an after-tax...
A company is considering the purchase of an industrial laser for $150,000. The device has a...
A company is considering the purchase of an industrial laser for
$150,000. The device has a useful life of five years and a salvage
(market) value of $30,000 at the end of those five years. The
before-tax cash flow is estimated to be $45,000 per year. The laser
would be depreciated using MACRS with a recovery period of three
years. If the effective income tax is 25% and the after-tax MARR is
15%, use the PW method on an after-tax...
A company is considering the purchase of an industrial laser for $150,000. The device has a...
A company is considering the purchase of an industrial laser for
$150,000. The device has a useful life of five years and a salvage
(market) value of $30,000 at the end of those five years. The
before-tax cash flow is estimated to be $45,000 per year. The laser
would be depreciated using MACRS with a recovery period of three
years. If the effective income tax is 25% and the after-tax MARR is
15%, use the PW method on an after-tax...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- 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...
- 1) The 3rd bright fringe of a double slit interference pattern is 30.0 cm above the...
- A solar cell generates a potential difference of 0.320 V when a 445.0 ? resistor is...
- A ceiling fan consists of a small cylindrical disk with 5 thin rods coming from the...
- You measure the following quantities as A = 1.0 m ± 0.2 m, B = 2.0...
ADVERTISEMENT