How much can afford to pay for the computer

Assignment Help Microeconomics

Reference no: EM132168890

Question: A corporation is considering buying a mediumsized computer that will eliminate a task that must be performed three shifts per day, 7 days per week, except for one 8-hour shift per week when the operation is shut down for maintenance. At present four people are needed to perform the day and night tasks. Thus the computer will replace four employees. Each employee costs the company $32,000 per year ($24,000 in direct wages plus $8000 per year in other company employee costs). It will cost $18,000 per year to maintain and operate the computer. The computer will be depreciated by sum-of-years'-digits depreciation using a 6-year depreciable life, at which time it will be assumed to have zero salvage value. The corporation has a combined federal and state incremental tax rate of 50%. If the firm wants a 15% rate of return, after considering both state and federal income taxes, how much can it afford to pay for the computer?

Reference no: EM132168890

Questions Cloud

Relationships among factors of three dimensions : In s-c-p paradigm, identify three relationships among factors of the three dimensions of structure, conduct, and performance and provide rationales

Public influence company revenue : How does real gross domestic product and federal debt held by the public influence company revenue?

What is the maximum equipment purchase price : A large profitable company, in the 40% combined federal/state tax bracket,is considering the purchase of a new piece of equipment that will yield benefits.

Describe how you would conduct the due diligence : Describe how you (as the venture capitalist) would conduct the due diligence for the business venture.

How much can afford to pay for the computer : A corporation is considering buying a mediumsized computer that will eliminate a task that must be performed three shifts per day, 7 days per week.

Describe the core management team positions : Describe the core management team positions (names are not required). What outside professional services are required?

Can you identify any important differences : What is a notifiable disease? Include website/s with information about notifiable diseases in Australia - what is contact tracing in epidemiology

At what price would she have to sell the house : A house and lot are for sale for $155,000. It is estimated that $45,000 is the land's value and $110,000 is the value of the house.

How would you apply your experience to larger-scale decision : Apply a business decision model to something you do every day, such as select an outfit, order lunch, or determine your exercise routine.

User Account

All Pages