90.2K

Verified Solution

Link Copied!

a) What is the AW of the ATCF of Design A?

b) What is the AW of the ATCF of Design B?

c) For the design that should be chosen if repeatability assumption applies, please write the AW of the ATCF of the selected Design here.

d) What is the EVA of Design B in year 4?

A firm must decide between two silicon layer chip designs from Intel. Their effective income tax rate is 40%, and MACRS-GDS depreciation is used. If the desired after-tax return on investment is 10% per year, Design A: Capital investment: $1,610,000 MV at end of useful life: $765,000 Annual revenues less expenses: $420,000 MACRS property class (years): 5 useful life (years): 7 . Design B: Capital investment: $1,900,000 MV at end of useful life: $850,000 Annual revenues less expenses: $540,000 MACRS property class (years): 5 useful life (years): 6 . . A firm must decide between two silicon layer chip designs from Intel. Their effective income tax rate is 40%, and MACRS-GDS depreciation is used. If the desired after-tax return on investment is 10% per year, Design A: Capital investment: $1,610,000 MV at end of useful life: $765,000 Annual revenues less expenses: $420,000 MACRS property class (years): 5 useful life (years): 7 . Design B: Capital investment: $1,900,000 MV at end of useful life: $850,000 Annual revenues less expenses: $540,000 MACRS property class (years): 5 useful life (years): 6

Answer & Explanation Solved by verified expert

See Answer