A special-purpose machine tool set would cost $20,000. The tool set will be financed by a $10,000 bank loan repayable in two equal annual installments at 10% compounded annually. The tool is expected to provide annual (material) savings of $30,000 for two years and is to be depreciated by the MACRS three-year recovery period. The tool will require annualO&M costs in the amount of $5,000. The salvage value at the end of the two years is expected to be $8,000. Assuming a marginal tax rate of 25% and MARR of 15%, what is the net present worth of this project?

X Problem 10-19 (book/static) Question Help A special-purpose machine tool set would cost $20,000. The tool set will be financed by a $10,000 bank loan repayable in two equal annual installments at 10% compounded annually. The tool is expected to provide annual (material) savings of $30,000 for two years and is to be depreciated by the MACRS three-year recovery period. The tool will require annual O&M costs in the amount of $5,000. The salvage value at the end of the two years is expected to be $8,000. Assuming a marginal tax rate of 25% and MARR of 15%, what is the net present worth of this project? Click the icon to view the worksheet for your calculation. Click the icon to view the MACRS depreciation schedules. Click the icon to view the interest factors for discrete compounding when i = 10% per year. Click the icon to view the interest factors for discrete compounding when i = 15% per year. The net present worth of the project is $ thousand. (Round to one decimal place.) More Info - X 1 More Info - X _5 _3 -- 7 10 - _ 1 Class Year n Depreciation rate 200% 200% 200% 200% 150 33.33 44.45 14.81 7.41 Cash Flow So 1 2 Statement Operating activities Net income $10,400 $12,019 Depreciation 6,666 4,445 Investment activities Investment -$20,000 Salvage 8,000 Gains tax (40%) Financial activities Borrowed funds 10,000 Principal repayment Net cash flow - $10,000 20.00 32.00 19.20 11.52 11.52 5.76 14.29 24.49 17.49 12.49 8.93* 8.92 8.93 4.46 10.00 18.00 14.40 11.52 9.22 7.37 6.55 6.55 6.56 5.91 5.90 6.55 3.28 5.91 5.90 5.91 Check Answer nswer X Problem 10-19 (book/static) Question Help A special-purpose machine tool set would cost $20,000. The tool set will be financed by a $10,000 bank loan repayable in two equal annual installments at 10% compounded annually. The tool is expected to provide annual (material) savings of $30,000 for two years and is to be depreciated by the MACRS three-year recovery period. The tool will require annual O&M costs in the amount of $5,000. The salvage value at the end of the two years is expected to be $8,000. Assuming a marginal tax rate of 25% and MARR of 15%, what is the net present worth of this project? Click the icon to view the worksheet for your calculation. Click the icon to view the MACRS depreciation schedules. Click the icon to view the interest factors for discrete compounding when i = 10% per year. Click the icon to view the interest factors for discrete compounding when i= 15% per year. The net present worth of the project is $ thousand. (Round to one decimal place.) * More Info - X i More Info - X Single Payment Compound Present Amount Worth Factor Factor (F/P, I, N) (P/F, I, N) 1.1000 0.9091 1.2100 0.8264 1.3310 0.7513 1.4641 0.6830 1.6105 0.6209 Compound Amount Factor (F/A, I, N) 1.0000 2.1000 3.3100 4.6410 6.1051 Equal Payment Series Sinking Present Fund Worth Factor Factor (A/F, i, N) (P/A, I, N) 1.0000 0.9091 0.4762 1.7355 0.3021 2.4869 0.2155 3.1699 0.1638 3.7908 Capital Recovery Factor (A/P, I, N) 1.1000 0.5762 0.4021 0.3155 0.2638 Single Payment Compound Present Amount Worth Factor Factor (F/P, I, N) (P/F, I, N) 1.1500 0.8696 1.3225 0.7561 1.5209 0.6575 1.7490 0.5718 2.0114 0.4972 Compound Amount Factor (F/A, I, N) 1.0000 2.1500 3.4725 4.9934 6.7424 Equal Payment Series Sinking Present Fund Worth Factor Factor (A/F, i, N) (P/A, I, N) 1.0000 0.8696 0.4651 1.6257 0.2880 2.2832 0.2003 2.8550 0.1483 3.3522 Capital Recovery Factor (A/P, i, N) 1.1500 0.6151 0.4380 0.3503 0.2983 Enter your answer in the 1.7716 1.9487 2.1436 2.3579 0.5645 0.5132 0.4665 0.4241 7.7156 9.4872 11.4359 13.5795 0.1296 0.1054 0.0874 0.0736 4.3553 4.8684 5.3349 5.7590 0.2296 0.2054 0.1874 0.1736 2.3131 2.6600 3.0590 3.5179 4.0456 0.4323 0.3759 0.3269 0.2843 0.2472 8.7537 11.0668 13.7268 16.7858 20.3037 0.1142 0.0904 0.0729 0.0596 0.0493 3.7845 4.1604 4.4873 4.7716 5.0188 0.2642 0.2404 0.2229 0.2096 0.1993 All parts showing