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A company is considering investment in a flexible manufacturing system. The estimated cash flows for this investment are
N: 0, 14, 14, 4
Description: price of system, revenue per year, expense per year, salvage value
Cash flow: F0, 1,000,000 , 500,000 , 0
The company pays income tax at 35% and the allowed depreciation schedule as follows
Year: 1,2,3,4
Depreciation(%): 33.33, 44.45, 14.81, 7.41
Assume the MARR is 10%
What is the maximum value of the investment value F0 which makes the investment attractive using present worth criterion?
Any help would be greatly appreciated. I need help on how to start this problem. I'll be sure to pick the best answer.
