A granary has two options for a conveyor used in the manufacture
Ask Expert

  • Your study cart is empty!

Be Prepared For The Toughest Questions

Practice Problems

A granary has two options for a conveyor used in the manufacture

A granary has two options for a conveyor used in the manufacture of grain for transporting, filling, or emptying. One conveyor can be purchased and installed for $70,000 with $3,000 salvage value after 16 years. The other can be purchased and installed for $110,000 with $4,000 salvage value after 16 years. Operation and maintenance for each is expected to be $18,000 and $14,000 per year, respectively. The granary uses MACRS-GDS depreciation, has a marginal tax rate of 40%, and has a MARR of 9% after taxes.

A) Determine which alternative is less costly, based upon comparison of after-tax annual worth.

Show the AW values used to make your decision:

Conveyor 1: $ ?

Conveyor 2: $ ?

B) What must the cost of the second (more expensive) conveyor be for there to be no economic advantage between the two?

Cost of the second conveyor: $ ?

Hint
Accounts & FinanceMARR i.e. the minimum acceptable rate of return is the minimum profit which the investor expects to make from the investment, by taking into the account the risks of the investment along with the opportunity cost of undertaking it instead of several other investments. These are also called as the hurdle rates, cut-off rates or even benchmarks....

Know the process

Students succeed in their courses by connecting and communicating with
an expert until they receive help on their questions

1
img

Submit Question

Post project within your desired price and deadline.

2
img

Tutor Is Assigned

A quality expert with the ability to solve your project will be assigned.

3
img

Receive Help

Check order history for updates. An email as a notification will be sent.

img
Unable to find what you’re looking for?

Consult our trusted tutors.

Ask a Question

Developed by Versioning Solutions.