Solved: Elias wants to perform an after-tax evaluation
Chapter 17, Problem 17.52(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. Twoalternatives are available, but others may beidentified if these are not acceptable. Using theinformation shown, MACRS depreciation withn = 3 years, a 5-year study period, after-taxMARR = 7% per year, Te = 34%, and a spreadsheet,he obtained the results AWG = $ 2176 and AWH= $3545. Any tax effects when the equipment issalvaged were neglected. Thus, with MACRSdepreciation, method H is the better method. Use classical SL depreciation with n = 5 years toevaluate the same alternatives. Is the decisiondifferent from that reached using MACRS?Method G HFirst cost, $ 100,000 150,000Salvage value, $ 10,000 20,000Savings, $ per year 35,000 45,000AOC, $/year 15,000 6,000Expected life, years 5 5
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