How to estimate the real dollar costs and benefits

Reference no: EM13219920

A telephone distribution company is considering building a new automated switching equipment substation with a useful life of 20 years. The company uses a 14% MARR to assess capital investment projects. Estimated real dollar costs and benefits are as follows: Category Amount Building initial cost $1,000,000 Equipment initial cost $ 500,000 Equipment salvage value $ 25,000 Annual gross income $ 300,000 year 1 Income gradient years 2 - 5 $ 25,000 Annual gross income $ 400,000 years 6 - 20 Annual operating expenses $ 160,000 first 10 years $ 200,000 years 11 to 15 $ 250,000 years 16 to 20 The substation will be put into service on the first day of the company's fiscal year. Using MACRS depreciation in a before tax analysis, should the company build the substation?

Reference no: EM13219920

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How to estimate the real dollar costs and benefits : A telephone distribution company is considering building a new automated switching equipment substation with a useful life of 20 years. The company uses a 14% MARR to assess capital investment projects. Estimated real dollar costs and benefits

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