Elias wants to perform an after-tax evaluation
Chapter 17, Problem 17.25(choose chapter or problem)
Elias wants to perform an after-tax evaluation ofequivalent methods to electrostatically removeairborne particulate matter from clean rooms usedto package liquid pharmaceutical products. Usingthe information shown, MACRS depreciation withn = 3 years, a 5-year study period, after-taxMARR = 7% per year, and Te = 34% and aspreadsheet, he obtained the results AWA = $ 2176and AWB = $3545. Any tax effects when theequipment is salvaged were neglected. Method Bis the better method. Now, use classical SL depreciation with n = 5 yearsto select the better method. Is the decision differentfrom that reached using MACRS? After solving byhand, verify your answer using a spreadsheet.Method A BFirst cost, $ 100,000 150,000Salvage value, $ 10,000 20,000Savings, $ per year 35,000 45,000AOC, $ per year 15,000 6,000Expected life, years 5 5
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