Year 1 2 A firm must decide between two silicon layer chip designs from Intel. Their effective income tax rate is 33%, and MACRS depreciation is used. If the desired after-tax return on investment is 11% per year, which design should be chosen? Calculate the AW value for the Design A. GDS Recovery Rates (13) 5-year Property Class Design A Designs 0.2000 Capital investment $1,210,000 AWA(11%) =$(Round to the nearest dollar.) $1,960,000 0.3200 MV at end of useful life $1,030,000 $1,050,000 3 0.1920 Annual revenues less Calculate the AW value for the Design B. 0.1152 $180,000 $410,000 expenses 0.1152 MACRS property class 5 years 5 years AWE(11%) = $(Round to the nearest dollar.) 6 0.0576 Useful life 7 years 6 years 9 Click the icon to view the GDS Recovery Rates (re) for the 5-year property class. Based on the AW values, should be chosen. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 11% per year. 4 5