Can someone solve for the Present worth of A with steps. The Ford Motor Company
ID: 1208996 • Letter: C
Question
Can someone solve for the Present worth of A with steps.
The Ford Motor Company is considering three mutually exclusive electronic stability control systems for protection against rollover of its automobiles. The investment period is four years (equal lives), and the MARR is 15% per year. Data for fixturing costs of the systems are given on the right. The alternatives all have a MACRS (GDS) property class of three years. If the effective income tax rate is 38% and the aftertax MARR = (1 - 0.3S)(15%) = 9.3% per year: which alternative should be recommended? Click the icon to view the GDS Recovery Rates (r_k) for the 3-year property class. Calculate the PW value for the alternative A. PW_A(9.3%) = (Round to the nearest dollar.)Explanation / Answer
Present value = A / (1+i)^n
t=0 t=1 t=2 t=3 t=4 Initial cost 13000 MACR % 33.33 44.45 14.81 7.41 Depreciation D 4332.9 5778.5 1925.3 963.3 Revenue r 4200 4200 4200 4200 Salvage S 2400 Taxable income TI -132.9 -1578.5 2274.7 5636.7 Tax 38% T 0 0 864.386 2141.946 Net income = TI-T 0 0 1410.314 3494.754 Revenue at the Year end R. 4200 4200 1410.314 3494.754 Present value -13000 3652.173913 3175.803403 927.3043478 1998.136942 NPV -3246.581394