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Elementary,Middle School,High School,College,University,PHD
Teaching Since: | May 2017 |
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Questions Answered: | 66690 |
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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
A profitable wood products corporation is considering buying a parcel of land for $50,000, building a small factory building at a cost of $200,000, and equipping it with $150,000 of MACRS 5-year-class machinery. If the project is undertaken, MACRS depreciation will be used. Assume the plant is put in service October 1. The before-tax net annual benefit from the project is estimated at $70,000 per year. The analysis period is to be 5 years, and planners assume the sale of the total property (land, building, and machinery) at the end of 5 years, also on October 1, for $328,000. Compute the after-tax cash flow based on a 34% combined income tax rate. If the corporation’s criterion is a 15% after-tax rate of return, should it proceed with the project?
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