5. Nuclear safety devices installed several years ago have been depreciated from a first cost of $200,000 to zero using theModified Accelerated Cost Recovery System (MACRS). The devices can be sold on the used equipment market for anestimated $15,000, or they can be retained in service for 5 more years with a $9000 upgrade now and an operatingexpenses (OE) of $6000 per year. The upgrade investment will be depreciated over 3 years with no salvage value. Thechallenger is a replacement with newer technology at a first cost of $40,000, n=5 years, and S= 0. The new units willhave operating expenses of $7000 per year.Use a 5-year study period, an effective tax rate of 41%, an after-tax minimum acceptable rate of return (MARR) of 10% per year, and anassumption of classical straight line depreciation (no half-year convention) to perform an after-tax AW-based replacement study.The annual worth of the defender is determined to be $10000The annual worth of the challenger is determined to be $Since the annual worth of the defender is smaller, it is retained.

Annual Worth - The annual worth is the sum of all the advantages and expenses over the course of a…

Nuclear safety devices installed several years ago have been depreciated from a first cost Modified Accelerated Cost Recovery System (MACRS). The devices can be sold on the use estimated $15,000, or they can be retained in service for 5 more years with a $9000 upgra expenses (OE) of $6000 per year. The upgrade investment will be depreciated over 3 year challenger is a replacement with newer technology at a first cost of $40,000, n = 5 years, have operating expenses of $7000 per year. a 5-year study period, an effective tax rate of 41%, an after-tax minimum acceptable rate of re amption of classical straight line depreciation (no half-year convention) to perform an after-tax

Nuclear safety devices installed several years ago have been depreciated from a first cost Modified Accelerated Cost Recovery System (MACRS). The devices can be sold on the use estimated $15,000, or they can be retained in service for 5 more years with a $9000 upgra expenses (OE) of $6000 per year. The upgrade investment will be depreciated over 3 year challenger is a replacement with newer technology at a first cost of $40,000, n = 5 years, have operating expenses of $7000 per year. a 5-year study period, an effective tax rate of 41%, an after-tax minimum acceptable rate of re amption of classical straight line depreciation (no half-year convention) to perform an after-tax

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 10P

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