# The defender in a catalytic oxidizer manufacturing plant has a market value of $130,000 and expected annual operating costs of $70,000 with no salvage value after its remaining life of 3 years. The depreciation charges for the next 3 years will be $69,960, $49,960, and $35,720. Using an effective tax rate of 35%, determine the CFAT for next year only

The defender in a catalytic oxidizer manufacturing plant has a market value of $130,000 and expected annual operating costs of $70,000 with no salvage value after its remaining life of 3 years. The depreciation charges for the next 3 years will be $69,960, $49,960, and $35,720. Using an effective tax rate of 35%, determine the CFAT for next year only that should be used in a present worth equation to compare this defender against a challenger that also has a 3-year life. Assume the company's after-tax MARR is 12%.

Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important... MARR

**M**inimum

**A**cceptable

**R**ate of

**R**eturn (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other...

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