What is acme estimated eat

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ACME Manufacturing in investing in new technology to improve the productivity of its operations which is estimated to produce yearly savings of $45,000. To achieve this, ACME will need to undertake upfront capital investment of $100,000 and $25,000 in net working capital. The equipment will be depreciated on a straight-line basis over 3 years. The working capital is expected to be recovered at the end of year three. The new equipment is estimated to have a salvage value of $50,000 at the end of the third year, when its sold. ACME's tax rate is 21% and its required rate of return is 9.0%. What is ACME's estimated EAT (earnings after-tax, excluding gains or losses on asset sales) for year three?

Reference no: EM132535176

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