Consider a project with an initial investment of $60,000, a 6 year useful life (and study period), and a $10,000 salvage value. You expect an annual net revenue of $15,000 (before tax), a MARR before tax of 15.3%, and an effective tax rate of 35%. The capital equipment is to be depreciated using MACRS GDS and a 3 year class life. A)For the cash flow , compute after-tax MARR and evaluate the cash flow using an equivalent worth method. B) Develop the after-tax cash flows for the project of using a 4 year class life and MACRS ADS. Draw the after-tax cash flow diagram.

Consider a project with an initial investment of $60,000, a 6 year useful life (and study period), and a $10,000 salvage value. You expect an annual net revenue of $15,000 (before tax), a MARR before tax of 15.3%, and an effective tax rate of 35%. The capital equipment is to be depreciated using MACRS GDS and a 3 year class life. A)For the cash flow , compute after-tax MARR and evaluate the cash flow using an equivalent worth method. B) Develop the after-tax cash flows for the project of using a 4 year class life and MACRS ADS. Draw the after-tax cash flow diagram.

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 21P

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