What is the after-tax annual cost of the slitter

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Reference no: EM131356261

A slitter for sheet sandpaper owned by Abbotsford Abrasives (AA) requires regular maintenance costing S7500 per year. Every five years it is overhauled at a cost of $25 000. The original capital cost was $200 000, with an additional $25 000 in non-capital expenses that occurred at the time of installation. The machine has an expected life of 20 years and a $15 000 salvage value. The machine will not be overhauled at the end of its life. AA pays taxes at a rate of 45% and expects an after-tax rate of return of 10% on investments. Given that the slitter is in the MACR$ 7-year property class, what is the after-tax annual cost of the slitter?

Reference no: EM131356261

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