Question

_{a company is evaluating a machine. the machine cost
$240,000, has a 3 year life, and has pretax operating cost of
$70,000 per year. the cost of the machine will be depreciated to
zero over the projects life. the machine will be sold for $50,000
at the end of the projects life. if the tax rate is 22% and the
discount rate is 12%, what is the equivalent annual cost for this
machine?}

Answer #1

a company is evaluating a machine. the machine cost
$240,000, has a 3 year life, and has pretax operating cost of
$70,000 per year. the cost of the machine will be depreciated to
zero over the projects life. the machine will be sold for $50,000
at the end of the projects life. if the tax rate is 22% and the
discount rate is 12%, what is the equivalent annual cost for this
machine?

Scholastic Co. is evaluating different equipment. Machine A
costs $85,000 per year has a four-year life, and costs $45,000 per
year to operate. The machine will be depreciated using
straight-line and the relevant discount rate is 8%. The machine
will have a salvage value of $20,000 at the end of the project's
life. The firm has a tax rate of 21%. Calculate the operating cash
flow in year 1. (Enter a negative value)

You are evaluating two different milling machines to replace
your current aging machine. Machine A costs $233,463, has a
three-year life, and has pretax operating costs of $60,516 per
year. Machine B costs $399,822, has a five-year life, and has
pretax operating costs of $32,258 per year. For both milling
machines, use straight-line depreciation to zero over the project’s
life and assume a salvage value of $43,001. Your tax rate is 34 %
and your discount rate is 10 %....

Tank Co. is evaluating a project that costs $100,000 and has a
5-year life.
Assume that depreciation is prime-cost to zero salvage value
over the 5-years, and the equipment can be sold for $6,000 at the
end of year 5. The average discount rate for such a project is 10
per cent on such projects. The individual tax rate is 15 per cent
and
corporate tax rate is 30 per cent.
It is projected that they will sell 12000 units...

You are evaluating two different silicon wafer milling machines.
The Techron I cost $270,000, has a 3-year life, and has pretax
operating costs of $73,000 per year. The Techron II costs $470,000,
has a 5-year life, and has pretax operating costs of $46,000 per
year. For both milling machines, use straight-line depreciation to
zero over the project’s life and assume a salvage value of $50,000.
If your tax rate is 24 percent and your discount rate is 10
percent, compute...

Suppose a machine costs $500,000 and requires $75,000 in pre-tax
annual operating costs. The machine will be fully depreciated on a
straight-line basis over its useful life of 10 years, a#er which it
will have zero salvage value. If the required return is 12% and the
tax rate is 22%, then what is the equivalent annual cost of the
machine?
A)$146,992.08
B) $135,992.08
C) $152,492.08
D) $88,492.08
E) $40,992.08

Riverview Company is evaluating the proposed acquisition of a
new production machine. The machine's base price is $200,000, and
installation costs would amount to $28,000. Also, $10,000 in net
working capital would be required at installation. The machine will
be depreciated for 3 years using simplified straight line
depreciation. The machine would save the firm $110,000 per year in
operating costs. The firm is planning to keep the machine in place
for 2 years. At the end of the second...

\$250,000 You are considering two machines A B that can be used for
the same purpose . Machine A costs will reduce costs by $ 70,000
per year , needs networking capital of $ 20,000 at time zero which
be released at the end of the project , has a 5 year straight line
depreciable life and can be sold at the end of the project's life
for $ 50,000 . Machine B costs $ 320,000 will reduce costs by...

You are evaluating two different silicon wafer milling machines.
The Techron I costs $264,000, has a 3-year life, and has pretax
operating costs of $71,000 per year. The Techron II costs $460,000,
has a 5-year life, and has pretax operating costs of $44,000 per
year. For both milling machines, use straight-line depreciation to
zero over the project’s life and assume a salvage value of
$48,000.
If your tax rate is 22 percent and your discount rate is 12
percent, compute...

The Virginia Cane Company (VCC) is considering investing in a
new cane manufacturing machine that has an estimated life of 4
years. The cost of the machine is $50,000 and the machine will be
depreciated straight-line over its 4-year life to a salvage value
of $0. While the machine will be fully depreciated over the
project’s life, management thinks the cane machine can be sold for
$3,000, excluding applicable tax, at project end.
In the first year, VCC expects to...

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