After-tax equivalent annual worth of investment

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Reference no: EM131590051

A company is considering the purchase of a large stamping machine that will cost $185,000, plus $4,700 transportation and $9,300 installation charges. It is estimated that, at the end of five years, the market value of the machine will be $32,000. The IRS has established that this machine will fall under a three-year MACRS class life category. The justifications for the machine include $26,000 savings per year in labor and $36,000 savings per year in reduced materials. The before-tax MARR is 20% per year, and the effective income tax rate is 40%. What is the after-tax equivalent annual worth of this investment over the five year period which ends with the sale of the machine? (Do not enter a dollar sign $ with your answer.)

Reference no: EM131590051

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