If the simulator in problem 1316 is purchased on a 3-year, Ask an Expert

Economics

If the simulator in Problem 13.16 is purchased on a 3-year loan, what is the EAC? The loan is for 80% of the cost; the interest rate is 12%; and the payments are uniform. (Answer: $259.4K)

Problem 16

The R&D lab of Big Tech Manufacturing will purchase a $1.8M process simulator. It will be replaced at the end of year 5 by a newer model.

Use MACRS and a tax rate of 40%. The simulator's salvage value is $.5M.

a) What is the ATCF due to the simulator in year 5?

b) What is the equipment's after-tax EAC over the 5 years if the interest rate is 10%?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M92638462

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