Flying Aces has a cost plus fixed fee contract with the air force to build jets The government will buy any additional equipment that it needs on a justified cost savings basis The incremental tax rate for the company is 35 The company has computed the following labor savings for a new equipment that costs $45000 Period 1 Period 2 Before Tax $25,000 $25,000 After Tax $16,250 $16,250 The company has an after tax time value of money of 6 and the federal government has a before tax time value of money of 5 Should the equipment be purchased A COMPANY YES GOVT YES B COMPANY YES GOVT NO C INDETERMINATE D COMPANY NO GOVT NO E COMPANY NO GOVT YES The Answer f is E Please show calculation in Excel on how to get the answer and show the function page

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Question: Flying Aces has a cost-plus-fixed fee contract with the air force to build jets. The government will buy any additional equipment that it needs on

Flying Aces has a cost-plus-fixed fee contract with the air force to build jets. The government will buy any additional equipment that it needs on a justified cost-savings basis.

The incremental tax rate for the company is 35%. The company has computed the following labor savings for a new equipment that costs $45000:

	Period 1	Period 2
Before Tax	$25,000	$25,000
After Tax	$16,250	$16,250

The company has an after-tax time value of money of 6% and the federal government has a before-tax time value of money of 5%. Should the equipment be purchased?

A COMPANY-YES; GOVT-YES

B COMPANY-YES; GOVT-NO

C INDETERMINATE

D COMPANY-NO; GOVT-NO E COMPANY-NO; GOVT-YES

The Answer f is E

Please show calculation in Excel on how to get the answer and show the function page.

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