A certain engine lathe can be purchased for â$150,000 and depreciated over three years to a zero salvage value with the SL method. This machine will produce metal parts that will generate revenues of â$85,000 â(time zeroâ dollars) per year. It is a policy of the company that the annual revenues will be increased each year to keep pace with the general inflationâ rate, which is expected to average 4â%/year â(f=0.04â). âLabor, materials, and utilities totaling â$15,000 â(time 0â dollars) per year are all expected to increase at 9â% per year. Theâ firm's effective income tax rate is 45â%, and itsâ after-tax MARR âis 26â% per year. Perform anâ actual-dollarâ(Aâ$) analysis and determine the annual ATCFs of the preceding investment opportunity. Use a life of three years. What interest rate would be used for discountingâ purposes?
A certain engine lathe can be purchased for â$150,000 and depreciated over three years to a zero salvage value with the SL method. This machine will produce metal parts that will generate revenues of â$85,000 â(time zeroâ dollars) per year. It is a policy of the company that the annual revenues will be increased each year to keep pace with the general inflationâ rate, which is expected to average 4â%/year â(f=0.04â). âLabor, materials, and utilities totaling â$15,000 â(time 0â dollars) per year are all expected to increase at 9â% per year. Theâ firm's effective income tax rate is 45â%, and itsâ after-tax MARR âis 26â% per year. Perform anâ actual-dollarâ(Aâ$) analysis and determine the annual ATCFs of the preceding investment opportunity. Use a life of three years. What interest rate would be used for discountingâ purposes?
