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Engineering Economic Analysis Question: A company purchased production equipment that cost $120,000. They used sum-ofyears’-digits depreciation...

Engineering Economic Analysis Question:

A company purchased production equipment that cost $120,000. They used sum-ofyears’-digits depreciation with an estimate 5-year life and estimate salvage value of $0.

The company’s total tax rate is 34%. After 5 years, the equipment was sold for $40,000. It had reduced operating costs by $32,000 a year, before taxes.

Perform an after-tax net present worth analysis to determine if the purchase was satisfactory, assuming an MARR of 12%.

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