The defender in a multiple-effect solar cell manufacturing plant has a market value of $130,000 and expected annual operating costs of $70,000 with no salvage value after its remaining life of 3 years. The depreciation charges for the next 3 years will be $69,960, $49,960, and $35,720. Using an effective tax rate of 35% and an after-tax MARR of 12% per year, determine the cash flow after taxes (CFAT) for year 2 only that can be used in a PW equation for comparing the defender against a challenger that also has a 3-year life.
What will be an ideal response?
TI, year 2 = -70,000 - 49,960 = -119,960
Taxes, year 2 = -119,960(0.35) = $-41,986 (tax savings)
CFAT, year 2 = -70,000 + 41,986
= $-28,014
You might also like to view...
All welds have discontinuities and flaws, but they are not necessarily _____.? ?
Fill in the blank(s) with the appropriate word(s).
The smallest identifiable group of atoms is the ____________________.
Fill in the blank(s) with the appropriate word(s).
Every type of animal has different habitat requirements
Indicate whether the statement is true or false
General Motors' floating caliper rear disc brakes are the most common example of the screw-and-nut parking brake mechanism.
Answer the following statement true (T) or false (F)