Question: A new machine is estimated to cost $200,000 and reduce net annual operating expenses by $36,000 for 10 years and have a market value of $30,000 at the end of the 10^th year. Assume the firm is in the $335k-$10M taxable income bracket and the state tax rate is 6%. The machine is MACRS 7-year property class. The after-tax MARR is 10%/year. Prepare excel file to perform the following.
- Calculate the before-tax and after-tax IRR.
- Calculate the after-tax PW.
- Perform parts a and b using straight line depreciation.
- Perform parts a and b using DDB depreciation.