Invited to participate in remodeling

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Reference no: EM131092004

The Owls Engineering firm has been invited to participate in remodeling, Beurt\y Hall at Temple University and need to acquire a crane with a cost of $550,000. The cost of transporting the crane to Temple is $150,000. The project is expected to last seven years and at that time the cranes will be sold at an expected salvage value of $550,000(0.6)^t The crane has MACRS-GDS 7-year property class. The engineering firm will finance the crane with a loan to be paid with seven equal total payments plus interest every year at 6%. The engineering firm will receive for their services a payment of $200,000(1+0.05)^t per year. Their O&M costs are expected to be $75,000 the first year increasing by 10% every year. Perform an ATCF analysis to determine if the project is economically feasible for the engineering firm. The firm MARR is 12% and tax rate is 40%.

Reference no: EM131092004

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