Consider a project with an initial investment of $60,000, a 6 year useful life (and study period), and a $10,000 salvage value. You expect an annual net revenue of $15,000 (before tax), a MARR before tax of 15.3%, and an effective tax rate of 35%. The capital equipment is to be depreciated using MACRS GDS and a 3 year class life. A)For the cash flow , compute after-tax MARR and evaluate the cash flow using an equivalent worth method. B) Develop the after-tax cash flows for the project of using a 4 year class life and MACRS ADS. Draw the after-tax cash flow diagram.
Consider a project with an initial investment of $60,000, a 6 year useful life (and study period), and a $10,000 salvage value. You expect an annual net revenue of $15,000 (before tax), a MARR before tax of 15.3%, and an effective tax rate of 35%. The capital equipment is to be depreciated using MACRS GDS and a 3 year class life. A)For the cash flow , compute after-tax MARR and evaluate the cash flow using an equivalent worth method. B) Develop the after-tax cash flows for the project of using a 4 year class life and MACRS ADS. Draw the after-tax cash flow diagram.
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Consider a project with an initial investment of $60,000, a 6 year useful life (and study period), and a $10,000 salvage value. You expect an annual net revenue of $15,000 (before tax), a MARR before tax of 15.3%, and an effective tax rate of 35%. The capital equipment is to be
A)For the cash flow , compute after-tax MARR and evaluate the cash flow using an equivalent worth method.
B) Develop the after-tax cash flows for the project of using a 4 year class life and MACRS ADS. Draw the after-tax cash flow diagram.
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