Determine which alternative is less costly

Reference no: EM132043885

Question: A portable concrete test instrument used in construction for evaluating and profiling concrete surfaces (MACRS-GDS 5-year property class) is under consideration by a construction firm for $20,000. The instrument will be used for 6 years and be worth $1,250 at that time. The annual cost of use and maintenance will be $9,500. Alternatively, a more automated instrument (same property class) available from the manufacturer costs $26,500, with use and maintenance costs of only $8,500 and salvage value after 6 years of $3,500. The marginal tax rate is 40%, and MARR is an after-tax 12%.

Determine which alternative is less costly, based upon comparison of after-tax annual worth.

Alternative 1:

Alternative 2:

Reference no: EM132043885

Questions Cloud

Calculate the basic earnings per share : The average market price of the common shares in 2014 was $30. Calculate the Basic earnings per share

Solve the given problem related to savings account : Show numerically that a savings account with a current balance of $1,000 that earns interest at 9% annually is precisely sufficient to make the payments.

Why is a policy statement important : Why is a policy statement important? What information is necessary before a financial planner can assist a person in constructing an investment policy statement

Does the private sector have a career for you : Most people are familiar with some careers and settings like police officers, courts, and corrections, but what options exist outside of the government?

Determine which alternative is less costly : A portable concrete test instrument used in construction for evaluating and profiling concrete surfaces (MACRS-GDS 5-year property class) is under consideration

Determine gross profit : CarMax Inc. reports sales of $15,875,118 thousand and cost of sales of $13,691,824 thousand for the year ended February 28, 2017.

Explain methods that organizations can implement to help : Explain methods that organizations can implement to help ensure compliance with the AUP, mitigate their risk exposure, and minimize liability.

What was the dividend yield in given case : Polycom Systems earned $542 million last year and paid out 20 percent of earnings in dividends. By how much did the company's retained earnings increase?

Would you expect to have the same interest rate : Would you expect to have the same interest rate on either mortgage or would one of them have a lower interest rate?

User Account

All Pages