Determine which alternative is less costly

Assignment Help Financial Management

Reference no: EM131523584

A portable concrete test instrument used in construction for evaluating and profiling concrete surfaces (MACRS-GDS 5-year property class) is under consideration by a construction firm for $20,000. The instrument will be used for 6 years and be worth $1,250 at that time. The annual cost of use and maintenance will be $9,500. Alternatively, a more automated instrument (same property class) available from the manufacturer costs $26,500, with use and maintenance costs of only $8,500 and salvage value after 6 years of $3,500. The marginal tax rate is 40%, and MARR is an after-tax 12%.

Determine which alternative is less costly, based upon comparison of after-tax annual worth. (Alternative 1 or Alternative 2?)

Show the AW values used to make your decision:

Alternative 1: $...

Alternative 2: $...

Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±3%.

Reference no: EM131523584

Questions Cloud

Explain what trends do you see developing in the data : What trends do you see developing in the data? Do you see any major changes in the financial status of the company over the time period?

What are the four decision elements of vijay decision : Vijay is feeling much better these days. A year ago he took a big risk and opened a cafeteria style restaurant next to a major university.

Influence beta of corporation to yield leveraged beta : Discuss how beta of a corporation is assessed by analysts. Discuss how leverage can influence beta of corporation to yield leveraged beta.

Briefly describe the function of the joint commission : Briefly describe the function of the Joint Commission. How does it measure and ensure quality in an organization?

Determine which alternative is less costly : Determine which alternative is less costly, based upon comparison of after-tax annual worth.

Identify the ei competencies : Looking for information that deals with: Based on the depiction of Michelle Rhee's actions, decisions, views and attitudes in the documentary.

What is net present value of client original offer to union : Robin Briggs, a wealthy private investor, had been approached by Union Finance Company on the previous day. It seemed that Union Finance was interested.

How gac tracks and monitors its employees : Who should have a stake or an interest in how GAC tracks and monitors its employees?

What is your forecast of gl : The stock's required rate of return is 10% (assume the market is in equilibrium with the required return equal to expected return). What is your forecast of gl.

User Account

All Pages