A company is considering purchasing a $100,000 capital asset. The setup fees required to make the asset eligible for service will total $30,000. The asset will be depreciated over six years using the straight-line method and estimated salvage value (SV6) of $10,000. The asset will be kept in service for six years and then sold for $20,000. Over its useful life, the asset is estimated to generate $30,000 in annual revenue. Operation and maintenance (O&M) costs are estimated to be $6,000 in the first year. These O&M costs are expected to increase by US$1,000 per year thereafter. The after-tax MARR is 12% and the effective tax rate is 40%. 

Use the tabular format to calculate post-tax cash flows.

Answer rating: 100% (QA)

Year 1 Revenue 30000 OM Costs 6000 Depreciation 100000 10000 6 15000 Taxable Income Revenue OM Costs Depreciation 30000 6000 15000 9000 Taxes 40 Taxab... View the full answer