Analyses 1. An investment in a precast plant with a first cost of $3,000 is being planned. The plant is estimated to hav

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Analyses 1 An Investment In A Precast Plant With A First Cost Of 3 000 Is Being Planned The Plant Is Estimated To Hav 1 (81.29 KiB) Viewed 35 times

Analyses 1. An investment in a precast plant with a first cost of $3,000 is being planned. The plant is estimated to have a useful life of five years with a zero salvage value. The investment is expected to have an average annual income of $2,060 and annual expenditure of $1,100 throughout the useful life of the plant. The income tax rate is 30% and the straight-line depreciation method is to be used. An after-tax minimum attractive rate of return (MARR) of 12 % is required. (a) Evaluate whether this investment is economically attractive based on the net present value (NPV) analysis. (b) Assuming that the annual income and expenditure are estimated at today's prices, is the investment economically attractive if an annual inflation rate of 6% is taken into consideration? (c) Discuss why the results in (a) and (b) are different. State your reasons in detail.