Welcome
Nursing

Assume you have been asked to evaluate an investment in capital equipment for the production of biofuels. The machine will cost $215,000 and it will last 10 years (useful and depreciation lifespans). Using straight-line depreciation, the salvage value for the investment is $0. You expect the equipment to have a terminal value of $20,000 at the end of the investment period. The machine has an annual maintenance cost of $6,000. Your marginal tax rate is 30%; remember that you get to keep (1-m) for everything other than the depreciation shield on an after-tax basis (it’s simply m * depreciation shield). Your after tax-cost of capital (discount rate) is 9.5%. Labor costs in the production of biofuels are $17,500/year.  The machine will produce 25,500 units of biofuel annually that will be sold at $2.50/unit. Fill in the missing pieces (a through h) in the table below to complete the NPC analysis  Item Pre-tax After-tax Time Growth Rate Discount Rate P.V. Factor Present Value Machine -$215,000 -$215,000 0 – 0.095 1.0 -$215,000.00 Depr. Shield 21,500   1-10 0 0.095     Term.Valuea 20,000   10 0 0.095     $5,649.20 Repairs -6,000   1-10 0 0.095     NPV             -$195,223.51 NPC             $195,223.51 After-tax annual amount = PV(i/(1-(1+i)-n)) = 1/(PV Factor).You will need the following formulas to complete the table: [1-(1+i)-n]/i; (1+r)-n;Hint: After-tax cost of repairs is calculated exactly the same as the after-tax terminal value. Do NOT worry about number formatting (i.e. just type in the number), but DO round all answers to two (2) places to the right of the decimal.

- November 14, 2022 - Edwin Tunner

Assume you have been asked to evaluate an investment in capital equipment for the production of biofuels. The machine will cost $215,000 and it will last 10 years (useful and depreciation lifespans). Using straight-line depreciation, the salvage value for the investment is $0. You expect the equipment to have a terminal value of $20,000 at the end of the investment period.

The machine has an annual maintenance cost of $6,000. Your marginal tax rate is 30%; remember that you get to keep (1-m) for everything other than the depreciation shield on an after-tax basis (it’s simply m * depreciation shield). Your after tax-cost of capital (discount rate) is 9.5%. Labor costs in the production of biofuels are $17,500/year.  The machine will produce 25,500 units of biofuel annually that will be sold at $2.50/unit.

Fill in the missing pieces (a through h) in the table below to complete the NPC analysis 

Item

Pre-tax

After-tax

Time

Growth Rate

Discount Rate

P.V. Factor

Present Value

Machine

-$215,000

-$215,000

0

–

0.095

1.0

-$215,000.00

Depr. Shield

21,500

 

1-10

0

0.095

 

 

Term.Valuea

20,000

 

10

0

0.095

 

 

$5,649.20

Repairs

-6,000

 

1-10

0

0.095

 

 

NPV

 

 

 

 

 

 

-$195,223.51

NPC

 

 

 

 

 

 

$195,223.51
  1. After-tax annual amount = PV(i/(1-(1+i)-n)) = 1/(PV Factor).
    You will need the following formulas to complete the table: [1-(1+i)-n]/i; (1+r)-n;
    Hint: After-tax cost of repairs is calculated exactly the same as the after-tax terminal value.

Do NOT worry about number formatting (i.e. just type in the number), but DO round all answers to two (2) places to the right of the decimal.

Tired of numerous paper assignments?
Rely on us and receive professional paper writing assistance!
Order Now
Professional paper Writing Assistance

Who We Are

We are a professional website for customized writing. If you searched a question and stumbled into our website, you are in the right place to receive assistance with your coursework.

Do you handle any type of coursework?

Yes. We have displayed prior orders to demonstrate our experience. We can answer this question for you as we have previously. Please fill out our Order Form so that we may ensure its flawlessness. Correctly completing the order form will help our staff with reference, requirements, and future communication.

Is it hard to Place an Order?

  1. Click on the “Order Now” tab at the top menu or “GET A FREE QUOTE” icon at the bottom and a new page will appear with an order form to be filled
  2. Fill in the initial requirements in the small order form located on the home page and press “continue” button to proceed to the main order form or press “order” button in the header menu. Starting from there let our system intuitively guide you through all steps of ordering process. Submit detailed paper instructions, upload necessary files if needed and provide your contact information – you are almost done!
  3. Proceed with the payment- click on “PROCEED TO CHECKOUT” at the bottom of the page. From there, the payment sections will show, follow the guided payment process and your order will be available for our writing team to work on it. All your payments are processed securely through PayPal. This enables us to guarantee a 100% security of your funds and process payments swiftly.
  4. Delivery- Once finished, your final paper will be available for download through your personal dashboard. You will also receive an email notification with a copy of your paper attached to it.