BlastCo Analytics needs to purchase a new metal shaper. BlastCo's after-tax MARR is 12% and the corporatetax rate is 54%. A metal shaper is a CCA Class 8 asset. The remaining data are contained in the table below.ModelFlexFirst CostEconomic Life(Years)Annual Net SalvageSavingsValue$50,000$100,000 5$20,000Blender$120,000 5$55,000$25,000Flextastic $200,000 5$75,000$100,000(a) Using the annual worth method, which model should BlastCo buy?(b) What is the approximate after tax IRR of each model?(c) What is the exact after tax IRR of each model?

ModeFirst CostEconomic LifeAnnual Net SavingSalvage…

BlastCo Analytics needs to purchase a new metal shaper. BlastCo's after-tax MARR is 12% and the corporate tax rate is 54%. A metal shaper is a CCA Class 8 asset. The remaining data are contained in the table below. Annual Net Savings $100,000 5 $50,000 $20,000 Blender $120,000 5 $55,000 $25,000 Flextastic $200,000 5 $75,000 $100,000 (a) Using the annual worth method, which model should BlastCo buy? (b) What is the approximate after tax IRR of each model? (c) What is the exact after tax IRR of each model? Model Flex Economic Life (Years) First Cost Salvage Value

BlastCo Analytics needs to purchase a new metal shaper. BlastCo's after-tax MARR is 12% and the corporate tax rate is 54%. A metal shaper is a CCA Class 8 asset. The remaining data are contained in the table below. Annual Net Savings $100,000 5 $50,000 $20,000 Blender $120,000 5 $55,000 $25,000 Flextastic $200,000 5 $75,000 $100,000 (a) Using the annual worth method, which model should BlastCo buy? (b) What is the approximate after tax IRR of each model? (c) What is the exact after tax IRR of each model? Model Flex Economic Life (Years) First Cost Salvage Value

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 2E

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