What is the after-tax equivalent annual worth of investment

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A company is considering the purchase of a large stamping machine that will cost $190,000, plus $4,500 transportation and $9,000 installation charges. It is estimated that, at the end of five years, the MV of the machine will be $30,000. The IRS has established that this machine will fall under a three-year MACRS class life category. The justifications for the machine include $25,000 savings per year in labor and $35,000 savings per year in reduced materials. The before-tax MARR is 20% per year, and the effective income tax rate is 40%. What is the after-tax equivalent annual worth of this investment over the five year period which ends with the sale of the machine?

Reference no: EM13244315

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