What is the after-tax equivalent annual worth of this


A company is considering the purchase of a large stamping machone that will cost $130,000 plus $6,900 transportation and $12,600 installation charges. It is estimated that, at the end of five years, the market value of the machine will be $54,000. The IRS has established that this macine will fall under a three-year MACRS class life category. The justifications for the machine include $37,000 savings per year in labor and $47,000 savings per year in reduced materials. The before-tax MARR is 20% per year, and the effective income tax rate is 40%. What is the after-tax equivalent annual worth of this investment over the five year period which ends with the sale of the machine?

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Financial Management: What is the after-tax equivalent annual worth of this
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