Function of the salvage value

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Reference no: EM131810874

Graph the EAC as a function of the salvage value, which may vary from $0 to $.6M.

The R&D lab of Big Tech Manufacturing will purchase a $1.8M process simulator. It will be replaced at the end of year 5 by a newer model. Use MACRS and a tax rate of 40%. The simulator's salvage value is $.5M.

a) What is the ATCF due to the simulator in year 5?

b) What is the equipment's after-tax EAC over the 5 years if the interest rate is 10%?

Reference no: EM131810874

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