An equipment costing 300,000 is proposed in an US state that has an income tax r
ID: 1313135 • Letter: A
Question
An equipment costing 300,000 is proposed in an US state that has an income tax rate of 5.5% and which requires use of straight line depreciation. The equipment has zero salvage value,will be in use for 7 years with revenues projected to be 280,000 in the first year declining by 8,000 per year thereafter.Operating cost and material start at 160,000 in the first year and grow by 10,000 each year after the first year. The property falls in the 5year property group for depreciation and this will be the period used for the straight line depreciation.The federal tax rate is 34% and MACRS depreciation applies. Find the PW of the CFAT using an MARR of 10.0%. Report the ATCF for each year as part of answer documentation.
Explanation / Answer
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