Solution-Calculate earnings after taxes for five years that

Calculate earnings after taxes for five years that result

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Reference no: EM132542080

A firm is considering renewing its equipment. After renewal the life of equipment would be 5 years. The cost of equipment modifications is $1.9 million plus $100,000 in installation costs. Depreciation expense per year is $400,000. Additional sales revenue from the renewal should amount to $1.2 million per year, and additional operating expenses and other costs (excluding depreciation) will amount to 40% of the additional sales. The firm has an ordinary tax rate of 40%.

Question 1: Calculate earnings after taxes for 5 years that will result from the renewal?

Reference no: EM132542080

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Calculate earnings after taxes for five years that result

Reference no: EM132542080

Reference no: EM132542080

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