We-Clean-U, Inc., expects to receive $65,000 each year for 5 years from the sale of its newest soap, OnGuard. There will be an initial investment in new equipment of $150,000. The expenses of...


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We-Clean-U, Inc., expects to receive $65,000 each year for 5 years from the<br>sale of its newest soap, OnGuard. There will be an initial investment in new<br>equipment of $150,000. The expenses of manufacturing and selling the soap<br>will be $17,500 per year. Straight-Line Depreciation is to be used with $5,000<br>Salvage Value. Annual income tax rate is at 30%.<br>a. Compute the ATCF for the 5-year period using the tabular method (Show YEAR,<br>BTCF, DEPRECIATION, TAXABLE INCOME, INCOME TAX, ATCF).<br>b. If the MARR for We-Clean-U is 12%, is OnGuard a worthwhile investment?<br>

Extracted text: We-Clean-U, Inc., expects to receive $65,000 each year for 5 years from the sale of its newest soap, OnGuard. There will be an initial investment in new equipment of $150,000. The expenses of manufacturing and selling the soap will be $17,500 per year. Straight-Line Depreciation is to be used with $5,000 Salvage Value. Annual income tax rate is at 30%. a. Compute the ATCF for the 5-year period using the tabular method (Show YEAR, BTCF, DEPRECIATION, TAXABLE INCOME, INCOME TAX, ATCF). b. If the MARR for We-Clean-U is 12%, is OnGuard a worthwhile investment?

Jun 03, 2022
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