Reference no: EM132030874
Henredon purchases a high-precision programmable router for shaping furniture components for $240,000. It is expected to last 12 years and have a salvage value of $6,000. It will produce $60,000 in net revenue each year during its life. All dollar amounts are expressed in real dollars. Depreciation follows MACRS 7-year property, taxes are 40%, the real after-tax MARR is 10%, and inflation is 3.9%.
a) Determine the actual after-tax cash flows for each year from end of year 0 to end of year 12.
b) Determine the PW of the after-tax cash flows.
c) Determine the AW of the after-tax cash flows.
d) Determine the FW of the after-tax cash flows.
e) Determine the combined IRR of the after-tax cash flows.
f) Determine the combined ERR of the after-tax cash flows.
g) Determine the real IRR of the after-tax cash flows.
h) Determine the real ERR of the after-tax cash flows.