Comparing the results of the before-and after-tax analyses

Assignment Help Financial Management

Reference no: EM132038620

A manufacturer of fabricated metal products has acquired a new plasma table for $37,000. It is projected that the acquisition of this equipment will increase revenue by $10,000 per year. Operating costs for the machine will average $2,600 per year. The machine will be depreciated using the MACRS method, with a recovery period of 7 years. The company uses an after-tax MARR rate of 10% and has an effective tax rate of 30%.

Now, suppose that the duration of the project is six years and that an estimate of the value of the equipment cannot be obtained from the marketplace.

1. What conclusion can be drawn by comparing the results of the before- and after-tax analyses?

Reference no: EM132038620

Questions Cloud

What is the real interest rate on your bank account : If the general level of prices goes up by 2% every year, what is the real interest rate on your bank account?

What risks does polypharmacy bring to older adults : What risks does polypharmacy bring to older adults? What concerns do medical professionals (nurses in particular) have with polypharmacy in elderly patients?

Write brief summary of the issue on given topic : Select a public health issue and write a 750-1,000 word policy brief that provides a brief summary of the issue, options to solve the issue.

Calculate the annualized rate of interest on the loan : Calculate the annualized rate of interest on the loan. What is the cost of the loan now?

Comparing the results of the before-and after-tax analyses : What conclusion can be drawn by comparing the results of the before- and after-tax analyses?

Discuss the function of hiv protease : Discuss the function of HIV protease, integrase, and reverse transcriptase. Identify the characteristics of HIV which account for its transmission.

Find the before-tax pw-irr and discounted payback period : Find the before-tax PW, IRR and discounted payback period (before-tax MARR = 10%). Can the acquisition be economically justified? Why or why not?

What is the tax on the disposal transaction : What is the tax on the disposal transaction?

Which biogeochemical cycle does the bacterium participate : Which biogeochemical cycle does the bacterium participate in (Carbon, nitrogen, or phosphorus cycling)? How is this important to its role in bioremediation?

User Account

All Pages