Answered

IDNLearn.com: Where your questions are met with thoughtful and precise answers. Discover comprehensive answers to your questions from our community of experienced professionals.

Western Electronics (WE) is reviewing the following data relating to a new equipment proposal: Net initial investment outlay After-tax cash inflow from disposal of the asset after 5 years $10,000 Present value of an annuity of $i at 128for 5 years Present value of $1 at 128 in 5 years $50,000 3.605 0.567 WE expects the net after-tax savings in cash outflows from the investment to be equal in each of the 5 years. What is the minimum amount of after-tax annual savings oncluding depreciation effects) needed to make the investment yield a 12% return (rounded to the nearest whole dollar)?
$13,889.
$12,297
$8,189.
$11,111
$15,678

Sagot :

Ajeigbeibraheemidn

Answer:

$12.297

Explanation:

From the given information:

The required amount for the after-tax annual savings to yield a return of 12% can be calculated as follows:

The Present value PV of future salvage value, after tax is:

= $10000 × 0.567

= $5670

From the original outlay of investment which is = $50000

The net amount to be recovered in terms of the present value = $50000 - $5670

= $44330

Finally, the required amount for the after-tax annual savings = [tex]\dfrac{\$44330}{3.605}[/tex]

= $12.297

Thank you for using this platform to share and learn. Keep asking and answering. We appreciate every contribution you make. Find the answers you need at IDNLearn.com. Thanks for stopping by, and come back soon for more valuable insights.