Question: ASAP. typed answer plz fast 4 Q13 (10 marks) ABC Company is considering purchasing manufacturing equipment from two different suppliers. Equipment A has a purchase
4 Q13 (10 marks) ABC Company is considering purchasing manufacturing equipment from two different suppliers. Equipment A has a purchase price of $3 million and will cost $100,000, pre-tax, to operate on an annual basis. Equipment A will have to be replaced every 4 years and has a salvage value of $300,000. The present value of CCA for A is $797,619.70. Assume the company has other assets and UCC is always positive in the asset class. The tax rate is 40 percent, and the discount rate is 10 percent. (1) Calculate the present value of all cash flows for equipment A. Round your answer to the nearest integer. (2) What is the EAC (equivalent annuity cost) of A? Round your answer to the nearest integer
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
