Question

An​ auto-part manufacturing company is considering the purchase of an industrial robot to do spot​ welding,...

An​ auto-part manufacturing company is considering the purchase of an industrial robot to do spot​ welding, which is currently done by skilled labor. The initial cost of the robot is $250,000, and the annual labor savings are projected to be $125,000. If​ purchased, the robot will be depreciated under MACRS as a​ seven-year recovery property. This robot will be used for five years after which the firm expects to sell it for $50,000. The​ company's marginal tax rate is 25% over the project period. Suppose that the project requires a $30,000 investment in working capital at the beginning of the project and the entire amount will be recovered at the end of project life. Determine the net​ after-tax cash flows for each period over the project life. Assume MARR equals= 15%

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
An electrical appliance company purchased an industrial robot costing $400,000 in year 0. The industrial robot,...
An electrical appliance company purchased an industrial robot costing $400,000 in year 0. The industrial robot, to be used for welding operations, is classified as a sevenyear MACRS recovery property. If the robot is to be sold after four years at a salvage value of $250,000, compute the amount of gain taxes, assuming that both capital gains and ordinary incomes are taxes at 30%
In year​ 0, an electrical appliance company purchased an industrial robot costing​ $350,000. The robot is...
In year​ 0, an electrical appliance company purchased an industrial robot costing​ $350,000. The robot is to be used for welding​ operations, classified as​ seven-year recovery​ property and has been depreciated by the MACRS method. If the robot is to be sold after five​ years, compute the amounts of gains​ (losses) for the following two salvage values​ (assume that both capital gains and ordinary incomes are taxed at​ 21%): ​(a)​ $20,000 ​(b)​ $99,000 (a) If the robot is to be...
A company is considering the purchase of a large stamping machine that will cost $155,000, plus...
A company is considering the purchase of a large stamping machine that will cost $155,000, plus $5,900 transportation and $11,100 installation charges. It is estimated that, at the end of five years, the market value of the machine will be $44,000. The IRS has established that this machine will fall under a three-year MACRS class life category. The justifications for the machine include $32,000 savings per year in labor and $42,000 savings per year in reduced materials. The before-tax MARR...
Bottoms Up Diaper Service is considering the purchase of a new industrial washer. It can purchase...
Bottoms Up Diaper Service is considering the purchase of a new industrial washer. It can purchase the washer for $9,000 and sell its old washer for $2,200. The new washer will last for 6 years and save $2,700 a year in expenses. The opportunity cost of capital is 19%, and the firm’s tax rate is 40%. a. If the firm uses straight-line depreciation to an assumed salvage value of zero over a 6-year life, what is the annual operating cash...
St. Johns River Shipyards' welding machine is 15 years old, fully depreciated, and has no salvage...
St. Johns River Shipyards' welding machine is 15 years old, fully depreciated, and has no salvage value. However, even though it is old, it is still functional as originally designed and can be used for quite a while longer. The new welder will cost $84,500 and have an estimated life of 8 years with no salvage value. The new welder will be much more efficient, however, and this enhanced efficiency will increase earnings before depreciation from $25,000 to $50,000 per...
A company is considering the purchase of a 30-tonne hoist. The first cost is expected to...
A company is considering the purchase of a 30-tonne hoist. The first cost is expected to be $230 000. Net savings will be $35 000 per year over a 12-year life, and it will be salvaged for $30 000. If the company's after-tax MARR is 8 percent and it is taxed at 45 percent, what is the present worth of this project? The depreciation rate is 20%.
Replacement Analysis St. Johns River Shipyards' welding machine is 15 years old, fully depreciated, and has...
Replacement Analysis St. Johns River Shipyards' welding machine is 15 years old, fully depreciated, and has no salvage value. However, even though it is old, it is still functional as originally designed and can be used for quite a while longer. The new welder will cost $81,500 and have an estimated life of 8 years with no salvage value. The new welder will be much more efficient, however, and this enhanced efficiency will increase earnings before depreciation from $29,000 to...
Replacement Analysis St. Johns River Shipyards' welding machine is 15 years old, fully depreciated, and has...
Replacement Analysis St. Johns River Shipyards' welding machine is 15 years old, fully depreciated, and has no salvage value. However, even though it is old, it is still functional as originally designed and can be used for quite a while longer. The new welder will cost $182,500 and have an estimated life of 8 years with no salvage value. The new welder will be much more efficient, however, and this enhanced efficiency will increase earnings before depreciation from $29,000 to...
] Burton, a manufacturer of snowboards, is considering replacing an existing piece of equipment with a...
] Burton, a manufacturer of snowboards, is considering replacing an existing piece of equipment with a more sophisticated machine. The following information is given. • The proposed machine will cost $120,000 and have installation costs of $20,000. It will be depreciated using a 3 year MACRS recovery schedule. It can be sold for $60,000 after three years of use (before tax; at the end of year 3). • The existing machine was purchased two years ago for $95,000 (including installation)....
7-22. A company is considering the purchase of a capital asset for $100,000. Installation charges needed...
7-22. A company is considering the purchase of a capital asset for $100,000. Installation charges needed to make the asset for serviceable will total $30,000. The asset will be depreciated over six years using the straight-line method and an estimated salvage value (SV6) of $10,000. The asset will be kept in service for six years, after which it will be sold for $20,000. During its useful life, it is estimated that the asset will produce annual revenues of $30,000. Operating...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT