$!$

Required information

Determine $10\%-$per$-$year present worth $($PW$)$

of taxes over a $6-$year study period. $P=$

$$100,S=0,GI-OE=$$$50,$ and $T_e=30\%.$

Use straight line method to determine the present worth

$($PW$)$ of the tax with $n=4$ years.

The PW of taxes is determined to be $

Required information

Nuclear safety devices installed several years ago have been

depreciated from a first cost of $$200,000$ to zero using the

Modified Accelerated Cost Recovery System $($MACRS$).$ The

devices can be sold on the used equipment market for an

estimated $$15,000,$ or they can be retained in service for $5$

more years with a $$9000$ upgrade now and an operating

expenses $($OE$)$ of $$6000$ per year. The upgrade investment will

be depreciated over $3$ years with no salvage value. The

challenger is a replacement with newer technology at a first

cost of $$40,000,n=5$ years, and $S=0.$ The new units will

have operating expenses of $$7000$ per year.

Use a $5-$year study period, an effective tax rate of $44\%,$ an after$-$tax minimum

acceptable rate of return $($MARR$)$ of $17\%$ per year, and an assumption of

classical straight line depreciation $($no half$-$year convention$)$ to perform an after$-$

tax AW$-$based replacement study.

The annual worth of the defender is determined to be $

The annual worth of the challenger is determined to be $

Since the annual worth of the

$]$ is smaller, it is retained.