Problem $3$

A company is considering purchasing equipment that will cost $$1,000,000.$ The equipment is Class

$38($CCA rate $=30\%).$ The equipment will add $$80,000$ in production costs in year $1,$ and those costs

will rise by $$10,000$ each year. The equipment will produce revenues of $$400,000$ per year. The

equipment will be used for seven years than sold for $$50,000.$ Money will be borrowed to help pay

for the equipment: $$700,000$ will be borrowed, at $7\%$ interest. This loan must be repair in seven

equal annual payments. The applicable tax rate is $29\%,$ and a discount rate of $12\%$ should be used,

as this is the MARR of the firm.

Calculate the loan repayment schedule, the CCA schedule, and the $($pre$-$tax$)$ loss or gain on disposal.

Calculate all revenues and expenses, including taxes on all items, and calculate the Net Present

Worth of the proposed project

No Exel please