Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 73

Sun Microsystems has developed partnerships with several large manufacturing corporations to use Java software in their consumer and industrial products. A new corporation will be formed to manage these applications. One major project involves using Java in commercial and industrial appliances that store and cook food. The gross income and operating expenses are expected to follow the relations shown for the estimated life of 6 years. For t = 1 to 6 years,
The effective tax rate is 30%, the interest rate is 12% per year, and the depreciation method chosen for the $3,000,000 capital investment is a 5-year MACRS ADS alternative that allows straight line write-off with the half-year convention in years 1 and 6. Using a spreadsheet, estimate
a) the annual economic contribution of the project to the new corporation and b) the equivalent annual worth of these contributions.