Maurice Tutor

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Teaching Since: May 2017
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  • MCS,PHD
    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

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  • Professor
    Phoniex University
    Oct-2001 - Nov-2016

Category > Management Posted 04 May 2018 My Price 5.00

5-year-class machinery

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?

Answers

(5)
Status NEW Posted 04 May 2018 05:05 PM My Price 5.00

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