An industrial equipment is purchased for $300,000. It is expected to work for 12 years before...

 

Transcribed Image Text:

An industrial equipment is purchased for $300,000. It is expected to work for 12 years before it is sold for $50,000. Moreover, the annual cost of maintaining this equipment is estimated to be $20,000. Given those information and MARR-10%, answer Questions 1-4 below: For all questions, you are required to show all calculations. 1) Use the switchover technique of 150% DB to depreciate this equipment during its service life (1.25 marks). 2) Use the Corporate Federal Tax (2006) to construct the AFTCF given the calculations obtained in Question 1 and annual revenue of $150,000 (1.25 marks). 3) Use 25% income tax rate to construct the AFTCF given the calculations obtained in Question 1 and annual revenue of $150,000 (1.25 marks). 4) Calculate the PWs of the two cashflows obtained in Questions 2 & 3. (1.25 marks) An industrial equipment is purchased for $300,000. It is expected to work for 12 years before it is sold for $50,000. Moreover, the annual cost of maintaining this equipment is estimated to be $20,000. Given those information and MARR-10%, answer Questions 1-4 below: For all questions, you are required to show all calculations. 1) Use the switchover technique of 150% DB to depreciate this equipment during its service life (1.25 marks). 2) Use the Corporate Federal Tax (2006) to construct the AFTCF given the calculations obtained in Question 1 and annual revenue of $150,000 (1.25 marks). 3) Use 25% income tax rate to construct the AFTCF given the calculations obtained in Question 1 and annual revenue of $150,000 (1.25 marks). 4) Calculate the PWs of the two cashflows obtained in Questions 2 & 3. (1.25 marks)

Answer rating: 100% (QA)

Introduction i In this question Net present value is to be calculated with initial investme... View the full answer