A company planned to invest $150,000 to add some equipments in it’s production line. This new equioments will produce $50,000 benefits per year. The firm uses 50% bonus depreciation with the balance using 7-year MACRS depreciation. The equipment can be sold for $15,000 as a salvage value at the end of its 10-year useful life. Determine the decision to buy the equipments is acceptable or not. Assume, the after-tax MARR is 10% and income tax rate is 25% (federal and state combined).
A company planned to invest $150,000 to add some equipments in it’s production line. This new equioments will produce $50,000 benefits per year. The firm uses 50% bonus depreciation with the balance using 7-year MACRS depreciation. The equipment can be sold for $15,000 as a salvage value at the end of its 10-year useful life. Determine the decision to buy the equipments is acceptable or not. Assume, the after-tax MARR is 10% and income tax rate is 25% (federal and state combined).
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 10P
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A company planned to invest $150,000 to add some equipments in it’s production line. This new equioments will produce $50,000 benefits per year. The firm uses 50% bonus
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