ECOR 3800 Lecture 22: Final Exam Review
12 Jun 2016
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A slitter for sheet sandpaper owned by abbotsford abrasives (aa) requires regular maintenance costing per year. Every five years it is overhauled at a cost of 000. The original capital cost was 000, and an additional 000 in non-capital expenses was incurred at the time of installation. The machine has an expected life of 20 years and a 000 salvage value, and it will not be overhauled at the end of its life. Aa pays taxes at a rate of 45 percent and expects an after-tax rate of return of 10 percent on investments. Recalling that the cca rate for production equipment is 20 percent, what is the after-tax annual cost of the slitter? p initial cost. Ctf ( al p, lo% : - [ 25000 ( aip , [ 25,000 ( 0. 26380 ) "t 7500] 0. 35. Chretien brothers salvage made several equipment purchases in the past decade.
