Abbot placed into service a flexible manufacturing cell, Ask an Expert

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Abbot placed into service a flexible manufacturing cell costing $850,000 early this year. They financed $425,000 of it at 11% per year over 5 years. Gross income due to the cell is expected to be $750,000 with deductible expenses of $475,000. Depreciation is based on MACRS-GDS and the cell is in the 7 year property class. Abbot’s marginal tax rate is 40%, MARR is 10% after taxes, and they expect to keep the cell for 8 years.

Loan is payed using the following plan: pay the accumulated interest at the end of each interest period and pay the principal at the end of the loan period. Calculate Present Worth after Tax.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92746755

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