A furniture manufacturer is planning on buying a new industrial sander costing $118,000. The sander has projected maintenance costs of $16,000 annually over the three-year life of the sander. At the end of the three years, the sander will be worthless and will be scrapped. The company has a 34% tax rate, a 16% discount rate, and uses straight-line depreciation over the life of a project. What is the equivalent annual cost? $36,520 $47,892 $51,311 $68,540 None of the above.
A furniture manufacturer is planning on buying a new industrial sander costing $118,000. The sander has projected maintenance costs of $16,000 annually over the three-year life of the sander. At the end of the three years, the sander will be worthless and will be scrapped. The company has a 34% tax rate, a 16% discount rate, and uses straight-line depreciation over the life of a project. What is the equivalent annual cost? $36,520 $47,892 $51,311 $68,540 None of the above.
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 13P
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Question
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A furniture manufacturer is planning on buying a new industrial sander costing $118,000. The sander has projected maintenance costs of $16,000 annually over the three-year life of the sander. At the end of the three years, the sander will be worthless and will be scrapped. The company has a 34% tax rate, a 16% discount rate, and uses straight-line depreciation over the life of a project. What is the equivalent annual cost?
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$36,520
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$47,892
-
$51,311
-
$68,540
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None of the above.
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