Problem
(Refer to Problem 13.38.) The simulator in Problem 15.41 will save $600,000 per year in year-0 dollars in experimental costs.
(a) What is the after-tax IRR?
(b) What is the after-tax IRR if the loan of Problem 15.46 is used to buy the equipment?
(c) Graph the IRR for percentages financed from 0% to 90%
Problem 38
The simulator in Problem 13.16 will save $600,000 per year in experimental costs.
(a) What is the after-tax IRR?
(b) What is the after-tax IRR if the loan in Problem 13.37 is used to buy the equipment?
(c) Graph the IRR for financing percentages ranging from 0% to 90%.
Problem 16
The R&D lab of Big Tech Manufacturing will purchase a $1.8M process simulator. It will be replaced at the end of year 5 by a newer model. Use MACRS and a tax rate of 40%. The simulator's salvage value is $.5M.
a) What is the ATCF due to the simulator in year 5?
(b) What is the equipment's after-tax EAC over the 5 years if the interest rate is 10%?
Problem 37
If the simulator in Problem 13.16 is purchased on a 3-year loan, what is the EAC? The loan is for 80% of the cost; the interest rate is 12%; and the payments are uniform. (Answer: $259.4K)
Problem 16
The R&D lab of Big Tech Manufacturing will purchase a $1.8M process simulator. It will be replaced at the end of year 5 by a newer model. Use MACRS and a tax rate of 40%. The simulator's salvage value is $.5M.
a) What is the ATCF due to the simulator in year 5?
(b) What is the equipment's after-tax EAC over the 5 years if the interest rate is 10%?
Problem 41
The simulator in Problem 13.16 will save $600,000 per year in experimental costs.
(a) What is the after-tax IRR?
(b) What is the after-tax IRR if the loan in Problem 13.37 is used to buy the equipment?
(c) Graph the IRR for financing percentages ranging from 0% to 90%.
Problem 16
The R&D lab of Big Tech Manufacturing will purchase a $1.8M process simulator. It will be replaced at the end of year 5 by a newer model. Use MACRS and a tax rate of 40%. The simulator's salvage value is $.5M.
a) What is the ATCF due to the simulator in year 5?
(b) What is the equipment's after-tax EAC over the 5 years if the interest rate is 10%?
Problem 37
If the simulator in Problem 13.16 is purchased on a 3-year loan, what is the EAC? The loan is for 80% of the cost; the interest rate is 12%; and the payments are uniform. (Answer: $259.4K)
Problem 16
The R&D lab of Big Tech Manufacturing will purchase a $1.8M process simulator. It will be replaced at the end of year 5 by a newer model. Use MACRS and a tax rate of 40%. The simulator's salvage value is $.5M.
a) What is the ATCF due to the simulator in year 5?
(b) What is the equipment's after-tax EAC over the 5 years if the interest rate is 10%?
Problem 46
(Refer to Problem 13.37.) If the simulator in Problem 15.41 is purchased on a 3-year loan, what is the EAC? The loan is for 80% of the cost, the loan's interest rate is 12%, and the payments are uniform.
Problem 37
If the simulator in Problem 13.16 is purchased on a 3-year loan, what is the EAC? The loan is for 80% of the cost; the interest rate is 12%; and the payments are uniform. (Answer: $259.4K)
Problem 16
The R&D lab of Big Tech Manufacturing will purchase a $1.8M process simulator. It will be replaced at the end of year 5 by a newer model. Use MACRS and a tax rate of 40%. The simulator's salvage value is $.5M.
a) What is the ATCF due to the simulator in year 5?
(b) What is the equipment's after-tax EAC over the 5 years if the interest rate is 10%?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.