A company is considering purchasing equipment that will cost $1,000,000. The equipment is classified at a...
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A company is considering purchasing equipment that will cost $1,000,000. The equipment is classified at a CCA rate of 25%. The cquipment will add $80,000 in production costs each year and will produce revenues of $390,000 per year. The equipment will be used for seven years than sold for $50,000. Money will be borrowed to help pay for the equipment: $700,000 will be borrowed, at 8% interest. This loan must be repair in seven equal annual payments. The applicable tax rate is 36%, and a discount rate of 12% should be used, as this is the MARR of the firm. Calculate the loan repayment schedule, the CCA schedule, and the loss or gain on disposal. Calculate all revenues and expenses, and calculate the Net Present Worth of the proposed project. A company is considering purchasing equipment that will cost $1,000,000. The equipment is classified at a CCA rate of 25%. The cquipment will add $80,000 in production costs each year and will produce revenues of $390,000 per year. The equipment will be used for seven years than sold for $50,000. Money will be borrowed to help pay for the equipment: $700,000 will be borrowed, at 8% interest. This loan must be repair in seven equal annual payments. The applicable tax rate is 36%, and a discount rate of 12% should be used, as this is the MARR of the firm. Calculate the loan repayment schedule, the CCA schedule, and the loss or gain on disposal. Calculate all revenues and expenses, and calculate the Net Present Worth of the proposed project.
Expert Answer:
Answer rating: 100% (QA)
Loan repayment schedule Year PO Beginning Principal A Installment IP8 Interest Part paid RAI Principal Part paid OPR Principal outstanding 1 70000000 ... View the full answer
Related Book For
Business Statistics
ISBN: 978-0321925831
3rd edition
Authors: Norean Sharpe, Richard Veaux, Paul Velleman
Posted Date:
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