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Henredon purchases a high-precision programmable router for shaping furniture components for $240,000. It is expected to last 12 years and have a salvage value of $6,000. It will produce $60,000 in net revenue each year during its life. All dollar amounts are expressed in real dollars. Depreciation follows MACRS 7-year property, taxes are 40%, the real after-tax MARR is 10%, and inflation is 3.9%.

a) Determine the actual after-tax cash flows for each year from end of year 0 to end of year 12.

b) Determine the PW of the after-tax cash flows.

c) Determine the AW of the after-tax cash flows.

d) Determine the FW of the after-tax cash flows.

e) Determine the combined IRR of the after-tax cash flows.

f) Determine the combined ERR of the after-tax cash flows.

g) Determine the real IRR of the after-tax cash flows.

h) Determine the real ERR of the after-tax cash flows.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92867526

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