The simulator in problem 1316 will save 600000 per year in, Ask an Expert

Economics

The simulator in Problem 13.16 will save $600,000 per year in experimental costs.

(a) What is the after-tax IRR?

(b) What is the after-tax IRR if the loan in Problem 13.37 is used to buy the equipment?

Problem

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.:- M92638538

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