An Piece of Automated Assembly Equipment Has an Initial Cost

Essay

An piece of automated assembly equipment has an initial cost of $64,000 and generates net annual benefits of $150,000 per year. The equipment is expected to have zero salvage value at the end of its useful life of 5 years. Using straight- line depreciation, an after- tax MARR of 2%, a federal tax rate of 39%, and a state tax rate of 9%, determine if the investment in this equipment is economically justifiable on the basis of the present worth of the EVA estimates.