Determine which alternative is less costly

Assignment Help Finance Basics

Reference no: EM132043912

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 $19,000. The instrument will be used for 6 years and be worth $1,000 at that time. The annual cost of use and maintenance will be $6,500. Alternatively, a more automated instrument (same property class) available from the manufacturer costs $25,500, with use and maintenance costs of only $8,000 and salvage value after 6 years of $4,000. 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. Show the AW values used to make your decision.

Reference no: EM132043912

Questions Cloud

What is publix company : What is Publix company (PUSH) Return on Net Operating Assets (RNOA) for 2017?

Understanding of financial accounting and us gaap : Attaining a thorough understanding of financial accounting and U.S. GAAP is a worthwhile endeavor especially if a person hopes to become

What is the difference in total dollars : A loan officer states, "Thousands of dollars can be saved by switching to a 15-year mortgage from a 30-year mortgage." Calculate the difference in payments.

What amount will your annual payment be : Your mortgage payments, which are made at the end of each year (one payment each year), include both principle and 10% interest on the declining

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

What is the dollar amount of income that she needed : If London needs to have a total return of 0.20 during the year, then what is the dollar amount of income that she needed to have to reach her objective?

Calculate poon weighted average cost of capital : Calculate Poon's weighted average cost of capital that is appropriate to use in evaluating this capital budgeting project.

Explain how your selected biometric works : What are the ways that it be used in criminal investigations? Explain the limitations of your selected biometric.

What is unrealized gains and losses : Question: What is unrealized gains and losses from cash flow hedging derivatives?

User Account

All Pages