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  1. business
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  3. a)?b)? c)? a company is considering the purc

a)?b)? c)? A company is considering the purcriase of...

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Accounting

a)?
b)?
c)?
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A company is considering the purcriase of a capital asset for $100,000. 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 an an estimated salvage value (SV6) of $23,000. The asset will be kept in service for six years, after which it will be sold for $33,000. 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 $5,000 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. c. The before-tax present worth of this asset is $15,846. By how much would the annual revenues have to increase to make the purchase of this asset justifiable on a before-tax basis? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 15% per a. Calculate the after-tax cash flows and fill in the table below. (Round to the nearest dollar.)

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