A company is considering alternative methods of contour grinding. The first method costs $63,000 and is expected to have an 8-year life, with $21,600 of salvage value at that date. Its operating expenses are expected to be $31,500 per year. The other method the company is looking at costs $48,000 with an expected economic life of 8 years and a $16,500 salvage value. Its annual operating expenses are expected to be $35,000. The required tax life is 16 years, with a recovery value of 5% on that date. The tax rate is 50% and the company uses the straight line and sum of digits method. Take an after-tax analysis with a minimum required after-tax rate of return of 15%. 

By: 

a) Present Value; 

b) Annual Cost; 

c) Rate of Return

Answer rating: 100% (QA)

a Present Value Method 1 PV 63000 31500015 216001158 11681238 Method ... View the full answer