Problem
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.
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.