Assignment 5 - Problem 2 What is the after-tax present worth of a photocopier if it costs $11,100 and saves $2,500 per year in outsourced printing costs? Assume the copier will be worth $0 at the end of 6-years

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Assignment 5 - Problem 2

What is the after-tax present worth of a photocopier if it costs $11,100 and saves $2,500 per year in outsourced printing costs? Assume the copier will be worth $0 at the end of 6-years. Assume the company buying the copier is NOT in Canada but in a country that uses straight-line depreciation and has a corporate tax rate of 40%. The country does NOT use the ½-year-rule. The after-tax MARR is 10%. Based on this analysis, is the photocopier a wise purchase?

Assignment 5 - Problem 3

A Canadian company is considering the purchase of a $4,000 machine for their shop. The machine belongs to an asset Class with d = 0.20. The machine is expected to save $850 per year over its 10-year life, with no scrap value. The company's tax rate is 45% and its after-tax MARR is 15%. Find the after-tax PW of the machine; should the company purchase it? (Hint: Use CTF to make the problem easier - there is no CSF since the scrap value is zero)