Considering the installation of new machine

Assignment Help Business Economics
Reference no: EM131115115

Show calculations to get answer

1) A company is considering the installation of a new machine that costs $150,000. The machine is expected to lead to new net income of $40,000 per year for the next five years. Using SL depreciation, $0 salvage value, and an effective income tax rate of 50%; determine the after-tax rate of return for this investment. If the company’s after-tax MARR rate is 10%, would this be a good investment or not?

2) An auto supplier installed new equipment costing $1,050,000. The equipment generated new income averaging $300,000 per year, and its operating costs averaged $48,000 per year. The equipment was depreciated using the MACRS method, assuming a recovery period of 7 years and no salvage value. However, the equipment was kept in service for a total of 10 years, after which time a scrap dealer bought it for $60,000. The company uses an after-tax MARR rate of 8% per year and is in the 30% tax bracket. Determine the equipment’s after-tax net present worth over the 10-year service period.

Reference no: EM131115115

Questions Cloud

Decision be economically rational in the short-run : An airline loses money on one of its routes but has decided to continue to provide service. Could this decision be economically rational in the short-run? In the long-run?
Assume that all the factors affecting demand : Assume that all the factors affecting demand in this model remain the same, but that the price has changed. Further assume that the price changes are 100, 200, 300, 400, 500, 600 dollars. a) Plot the demand curve for the firm.
Briefly discuss the cause and the solution to bank : Briefly discuss the cause and the solution(s) to the international bank crisis involving less-developed countries.
Discuss one aspect of the low-cost-carrier business model : Discuss one aspect of the low-cost-carrier business model, such as Ryanair’s, that provides a sustainable cost advantage over a large network carrier, for example, British Airways.
Considering the installation of new machine : A company is considering the installation of a new machine that costs $150,000. The machine is expected to lead to new net income of $40,000 per year for the next five years. Using SL depreciation, $0 salvage value, and an effective income tax rate o..
Calculate the resistance of the armature circuit : Calculate the resistance of the armature circuit and the field circuit.
Thompson determined that a competitors product : On June 1, 2009, Thompson spent $12,400 to successfully prosecute a patent infringement suit. As a result, the estimate of useful life was extended to 12 years from June 1, 2009. Prepare all journal entries required in 2009 and 2010.
Question regarding the legal and ethical issues : 1. What are the legal and ethical issues involved? 2. Is there any missing information thatwould help you evaluate this argument? 3. What points could you makeagainst this argument and for a different opinion about thistopic?
When the fed purchases government securities : When the Fed purchases government securities ________ loans end up being made because ________.

Reviews

Write a Review

Business Economics Questions & Answers

  Classical aggregate supply and aggregate demand model

Consider a classical Aggregate Supply/Aggregate Demand model. Explain how a self-regulating economy will return to long run equilibrium after it falls in a recessionary gap. Explain the implications of the model you present in part A in the context o..

  Is the marginal product of labor increasing

First Problem The production function for fragles is f(K, L) = L/2 + K, where L is the amount of labor used and K the amount of capital used. Does this technology demonstrates increasing, constant or decreasing returns to scale? Is the marginal produ..

  Elucidate what happens to real gdp when it is initially

Elucidate what happens to real GDP when it is initially to the right of the equilibrium point and why. Indicate two public policies which would be appropriate for addressing this situation.

  Daily demand for workers in a purely competitive labor

Explain how many will be hired Daily Demand for Workers in a Purely Competitive Labor also Product Markets.

  Consumption pattern and welfare be affected

how will Kristine s consumption pattern and welfare be affected

  What are the spending and tax multipliers

Consider an economy in which autonomous consumption is 800, the marginal propensity to consume is 0.8, investment is 400, government spending is 500, taxation is 400, and net exports are 100. What is the equilibrium GDP in this economy? What are the ..

  Discuss the opportunity costs of natural disasters

Discuss the opportunity costs of natural disasters. Calculate (in $$$) your opportunity costs of natural disaster.

  Held constant when one moves along a demand curve

Suppose that the demand curve for a product is given by P=36-Q where P is in thousands of dollars per auto and quantity is in millions of cars per year. What other things are held constant when one moves along a demand curve?

  What are the pros and cons of regionalized marketing

Several soft drinks and juice companies are planning to put their names on fresh food and many of their initial forays will be in produce. (For example, Dole introduced freshly packaged salads with croutons and dressing). Discuss 2 challenges that co..

  What is per unit cost of producing units of output

What is per unit cost of producing 60 units of output. ATC(60)=$10 What is per unit labour cost of producing 60 units of output. AVC(60)=$6.67 What is per unit fixed cost of producing 60 units of output.

  Calculate consumption-government purchases-national saving

Suppose GDP is $8 trillion, taxes are $1.5 trillion, private saving is $0.5 trillion, and public saving is $0.2 trillion. Assume that the economy is closed. Calculate consumption, government purchases, national saving, and investment.

  Find the incremental benefit using either one of function

Three years ago Maricopa County implemented a policy to tackle the problem of particulate matter in the air. The project/policy consisted in paving and compacting some of the roads the dairy industry uses for feeding the cattle and transporting the m..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd