5 Two fixtures are being considered for a particular job in a manufactunng firm. The pertinent data for their comparison are summarized in the following table. Theeffective federal and state income tax rate is 20% Depreciation recapture is also taxed at 20% If the after-tax MARR is 6% per year, which of the two foturesshould be recommended? Assume repeatabilityFixture XFixture Y$40,000Capital investmentAnnual operating$35,000$6,000$4,000еxpenses6 yoarsS7,000SL to zero book value ovor 5 years8 yearsS8,000Useful lifeMarket valueDepreciation methodMACRS (GDS) with 5-year recovory periodCalculate the AW value for the Fixture XAWy (6%) $ (Round to the nearest dollar)

Given information Fixture X Capital investment= $35000 Annual cost=$6000 Useful life=6 years Market…

wo fadures are being considered for a particular job in a manufacturing firm. The pertinent data for their comparison are summanzed in the following table. The effective federal and state income tax rale is 20% Depreciation recapture is also taxed at 20% if the after-tax MARR is 6% per year, which of the two fodures should be recommended? Assume repeatablity Fixture X Fixture Y $40,000 Capital investment Annual operating $35,000 $6.000 $4,000 expenses 6 years 8 years S8.000 MACRS (GOS) with 5year recovery period Useful life Market value $7.000 Depreciation method SL to zero book value over 5 years Cakculate the AW value for the Faxture X AW, (6%)= S (Round to the nearest dollar)

wo fadures are being considered for a particular job in a manufacturing firm. The pertinent data for their comparison are summanzed in the following table. The effective federal and state income tax rale is 20% Depreciation recapture is also taxed at 20% if the after-tax MARR is 6% per year, which of the two fodures should be recommended? Assume repeatablity Fixture X Fixture Y $40,000 Capital investment Annual operating $35,000 $6.000 $4,000 expenses 6 years 8 years S8.000 MACRS (GOS) with 5year recovery period Useful life Market value $7.000 Depreciation method SL to zero book value over 5 years Cakculate the AW value for the Faxture X AW, (6%)= S (Round to the nearest dollar)

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 2E

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