Determine the after-tax cash flows for this project

Assignment Help Engineering Mathematics

Reference no: EM131506295

Question: Nordique Fab is an Arizona company dedicated to circuit board design and fabrication. It has just acquired new workstations and modeling software for its three "Valley of the Sun" design facilities, at a cost of $425,000 per site. This cost includes the hardware, software, transportation, and installation costs. Additional software training has been purchased at a cost of $25,000 per site. The estimated MV for each system during the fourth year is expected to be 5% of the total capital investment, at which time the systems will all be sold. The company believes that use of the new systems will enhance their circuit design business, resulting in a total increase in annual income of $1,000,000. The engineering design manager wants to determine the tax implications of this purchase. He estimates that annual operating and maintenance costs on the systems will be approximately $220,000 (all sites combined). The company's marginal effective tax rate is 35% and the MACRS depreciation method (with a fiveyear GDS recovery period) will be used. Use Figure to determine the after-tax cash flows for this project. If the after-tax MARR is 20% per year, would you recommend this investment?

Reference no: EM131506295

Questions Cloud

Explain factors that affect supply and prices of the product : Various measures of costs, including opportunity costs. Explain the factors that will affect demand, supply, and prices of that product.

Determine the recovery period for the furniture : Your company just purchased office furniture (asset class 00.11) for $100,000 and placed it in service on August 13, 2007.

Why is determining abnormal behavior so difficult : Why is determining abnormal behavior or a mental disorder so difficult?To develop your essay, keep in mind issues such as the role of social norms.

Explain benefits of proactive versus reactive change efforts : In organizational change, there is a debate in the literature about the benefits of proactive versus reactive change efforts.

Determine the after-tax cash flows for this project : Nordique Fab is an Arizona company dedicated to circuit board design and fabrication. It has just acquired new workstations and modeling software.

What is the macrs depreciation in the fourth year : Your company has purchased a large new truck tractor for over-the-road use (asset class 00.26). It has a cost basis of $180,000.

What is the difference in the amount of depreciation : A construction company is considering changing its depreciation from the MACRS method to the historical SL method for a general purpose hauling truck.

Explain your diagnosis : Explain your diagnosis, give examples of the character's problems or symptoms, and explain your the rationale for the diagnosis.

Determine the gds and ads depreciation deductions : A piece of construction equipment (asset class 15.0) was purchased by the Jones Construction Company. The cost basis was $300,000.

User Account

All Pages