You can buy a chance for $100,000 that will bring an annual income of $20,000 in
ID: 2725619 • Letter: Y
Question
You can buy a chance for $100,000 that will bring an annual income of $20,000 in year-0 dollars. the service life the equipment is 10 years10 years and it will be depreciated using straight line method 20% a Assume you will aell this crane for its book value at the end of 1" year, what is these sent worth of this equipment assuming your after tax real MARR is 4%? a. $1,548 b. $1,896 c. $1,962 d. $2,866 20. Considering your group project assignment and the case studies discussed at the beginning of each lecture video, briefly describe decision making process and criterion in engineering culture when evaluating different technical alternatives. Use the concepts of minimization/maximization of inputs/outputs, estimation, and time value of money.Explanation / Answer
Answer
Answer 19
Figures in $
Year
Annual Income
Depreciation Tax benefit
Purchase price
Total Cash flow
Disc Rate : 4%
Present value
A
B
C
D
E
(100000-10000)/10*0.2
A+B+C
D*E
0
20000
-100000
-80000
1
-80000
1
1800
91000
92800
0.961538
89230.77
(100000-9000)
Net Present value
9230.769
Figures in $
Year
Annual Income
Depreciation Tax benefit
Purchase price
Total Cash flow
Disc Rate : 4%
Present value
A
B
C
D
E
(100000-10000)/10*0.2
A+B+C
D*E
0
20000
-100000
-80000
1
-80000
1
1800
91000
92800
0.961538
89230.77
(100000-9000)
Net Present value
9230.769
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