The Ajax Semiconductor Company is attempting the profitability of adding another integrated circuit production line to i
Posted: Fri Jul 01, 2022 7:36 am
The Ajax Semiconductor Company is attempting the profitabilityof adding another integrated circuit production line to its presentoperations. The facility would cost $60 M and have no market valueat the end of five years. The facility could be depreciated usingstraight-line method. Gross income is expected to be $30 M per yearfor five years, and operating expenses are estimated to be 8M peryear for five years. The firm’s effective income tax rate is40%.(a)Set up a table and determine the CFAT for this project.(b)Is the investment worthwhile when the after-tax MARR is 12% peryear?