An automobile-manufacturing company is considering purchasing an industrial robot to do spot welding, which is currently done by skilled labor. The initial cost of the robot is $210,000, and the annual labor savings are projected to be $150,000. If purchased, the robot will be depreciated under the double-declining balance method during a six-year depreciable life period. The robot will be used for seven years, at the end of which time, the firm expects to sell it for $60,000. The company's marginal tax rate is 35% over the project period. Determine the net after-tax cash flows for each period over the project life. Assume MARR = 15%. %3D

An automobile-manufacturing company is considering purchasing an industrial robot to do spot welding, which is currently done by skilled labor. The initial cost of the robot is $210,000, and the annual labor savings are projected to be $150,000. If purchased, the robot will be depreciated under the double-declining balance method during a six-year depreciable life period. The robot will be used for seven years, at the end of which time, the firm expects to sell it for $60,000. The company's marginal tax rate is 35% over the project period. Determine the net after-tax cash flows for each period over the project life. Assume MARR = 15%. %3D

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 4E

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