5. You are evaluating two different silicon wafer milling machines. The Technotr

Question

5. You are evaluating two different silicon wafer milling machines. The Technotronic I costs $228,000, has a three-year life, and has pretax operating costs of $59,000 per year. The Technotronic II costs $400,000, has a five-year life, and has pretax operating costs of $32,000 per year. For both milling machines, use straight-line depreciation to zero over the project

5. You are evaluating two different silicon wafer milling machines. The Technotronic I costs $228,000, has a three-year life, and has pretax operating costs of $59,000 per year. The Technotronic II costs $400,000, has a five-year life, and has pretax operating costs of $32,000 per year. For both milling machines, use straight-line depreciation to zero over the project

Explanation / Answer

Question 5

Technotronic I

Operating cash flow = (-59000)*(1-34%) + 228000/3*34%= -13100

After tax salvage value = 36000

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