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  3. a company is considering the purchase of a capital

A company is considering the purchase of a capital asset for $120,000. Installation charges needed...

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Accounting

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A company is considering the purchase of a capital asset for $120,000. Installation charges needed to make the asset serviceable will total $40,000. The asset will be depreciated over six years using the straight-line method and an estimated salvage value (SV6) of $25,000. The asset will be kept in service for six years, after which it will be sold for $35,000. During its useful life, it is estimated that the asset will produce annual revenues of $40,000. Operating and maintenance (O\&M) costs are estimated to be $5,500 in the first year. These O\&M costs are projected to increase by $500 per year each year thereafter. The after tax MARR is 15% and the effective tax rate is 25%. a. Compute the after-tax cash flows. b. Compute the after-tax present worth of the project, and use a uniform gradient in your formulation. a before-tax basis? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 15% per year. a. Calculate the after-tax cash flows and fill in the table below. (Round to the nearest dollar.)

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