Method A:
AW = Total PV*(A/P,7%,5) = -13,290.34*0.2439 = -3,241.39 (Method A)
Method B:
AW = Total PV*(A/P,7%,5) = 6,772.51*0.2439 = 1,651.75 (Method B)
As can be seen, method B is still better than method A.Decision is unchanged.
Formula 34%*TI TI-T+D CFAT/(1+7%)^n Year (n) (GI-E-D); Year 5: PS + (GI-E-D) Initial cost & salvage value Depreciation Taxable Gross income (GI) Expenses ("E) (PS) (D) income (TI) 100000 15000 20000 35000 15000 20000 35000 15000 20000 0 35000 15000 20000 350001 15000 10000 20000 200000 10000 PV of CFAT -100000 18691.59 17468.77 35000 Taxes (T) CFAT -100000 20000 20000 0 20000 20000 34001 26600 Total PV 3 16325.96 15257.901 18965.43 -13290.34
(GI-E-D); Year 5: PS + (GI-E-D) Formula 34%*TI TI-T+D CFAT/(1+7%)^n Taxable income (TI) Year (n) Gross income (GI) 45000 45000 45000 45000 45000 Initial cost & salvage value Depreciation Expenses (E) (PS) (D) 150000 60001 30000 6000 30000 6000 30000 6000 30000 6000 20000 30000 9000 9000 9000 9000 29000 Taxes (T) CFAT -150000 3060 35940 3060 35940 3060 35940 3060 35940 9860 49140 Total PV PV of CFAT -150000 33588.79 31391.39 29337.75 27418.45 35036.14 6772.51
2. Elias wants to perform an after-tax evaluation of equivalent methods to electrostatically remove airbome particulate...
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Security Manufacturing, Inc. is a producer of surveillance systems. Its current line of surveillance systems are selling excellently. However, in order to cope with the foreseeable competition from other similar products, SM spent $6,400,000 to develop a new line of HD surveillance systems (new model development cost). The comprehensive 1440p HD surveillance system model can be used very well for any small home or business. As a result of the advanced HD analog technology made up of a 4-channel 4K...