The Ajax Semiconductor Company is attempting the profitability of adding another integrated circuit production line to its
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Question:
The Ajax Semiconductor Company is attempting the profitability of adding another integrated circuit production line to its present operations. The facility would cost $60 M and have no market value at the end of five years. The facility could be depreciated using straight-line method. Gross income is expected to be $30 M per year for five years, and operating expenses are estimated to be 8M per year for five years. The firm’s effective income tax rate is 40%.
(a)Set up a table and determine the CFAT for this project.
(b)Is the investment worthwhile when the after-tax MARR is 12% per year?
Related Book For
Engineering Economy
ISBN: 978-0132554909
15th edition
Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
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