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...
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$178672. If purchased, the robot will be depreciated under MACRS
as a five-year recovery property. The robot will be used for
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A car parts manufacturing company is considering investing in the development of a new robot. The...
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years. If the effective income tax is 25% and the after-tax MARR is
15%, use the PW method on an after-tax...
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