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An injection molding machine can be purchased and installed for $90,000. It is expected to be kept in service for eight years. It is believed that $10,000 can be obtained when the machine is disposed of the at the end of year eight. The net annual value added that can be attributed to this machine is constant over eight years and amounts to $15,000. An effective income tax-rate of 40% is used by the company, and the before-tax MARR equals 25% per year. Use 150% Declining Balance depreciation method.

Answer the following questions based on above given information.

a) What are the depreciation amounts in year one and year eight?

b) What are the ATCFs for this machine at the end of years 1 and 6?

c) What are the BTCF, TI, T and ATCF of year 8?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91373388

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