Buying appliances for restaurant. To complement the equipment you already have you need to buy a cooler
Question:
Buying appliances for restaurant. To complement the equipment you already have you need to buy a cooler that costs $20,000 and that it classifies for depreciation effects as a 3-year MACRS property. It is estimated that the asset will have a resale value at the end of its six-year lifespan of $3,000. Expected operational and maintenance expenses will be $1,500 in the first year and will increase $300 annually from the second year. Uniform annual income of $10,000 is expected. In addition, to acquire this alternative you needs to make a $10,000 loan that will be repaid in four years according to the depreciation itinerary shown in the table.
Balance Beginning Year || Accumulated Interest 7% || Total Accumulated || Annual Payment || Final balance
Generate the table by detailing the after-tax analysis of this investment alternative. Apply an effective tax rate of 30%. You must show your counts in detail to get credit.
Once your analysis is complete, briefly explain what merit measure (decision criteria) you would use to explain if this is a good investment. Write a sentence with your recommendation. Show a MARR after tax of 15%.
Statistics for Business and Economics
ISBN: 978-0132930192
8th edition
Authors: Paul Newbold, William Carlson, Betty Thorne