Two fixtures are being considered for a particular job in a manufactunng firm The pertinent data for their comparison are summanized in tho following table. The effective federal and state income tax rate is 20% Depreciation recapture is also taxed at 20% If the after tax MARR is 6% per year, which of the two fotures should be recommended? Assume repeatability Fixture Y Fixture X $35,000 $40,000 Capital investment Annual operating $6,000 $4,000 еxpenses Useful life Market value 6 yoars $7,000 SL to zero book value over 5 years 8 years $8,000 Depreciation method MACRS (ODS) with 5-year recovory period CID- Calculate the AW value for the Fixture X AWy(0%) $(Round to the nearest dollar)

Two fixtures are being considered for a particular job in a manufactunng firm The pertinent data for their comparison are summanized in tho following table. The effective federal and state income tax rate is 20% Depreciation recapture is also taxed at 20% If the after tax MARR is 6% per year, which of the two fotures should be recommended? Assume repeatability Fixture Y Fixture X $35,000 $40,000 Capital investment Annual operating $6,000 $4,000 еxpenses Useful life Market value 6 yoars $7,000 SL to zero book value over 5 years 8 years $8,000 Depreciation method MACRS (ODS) with 5-year recovory period CID- Calculate the AW value for the Fixture X AWy(0%) $(Round to the nearest dollar)

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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