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Date: 12/04/2023
Feedback Given By: kimccarr08
Feedback Comment: excellent work
Project Details
Project Status: Completed
This work has been completed by: Euphrates
Total payment made for this project was: $21.20
Project Summary: Marker’s Tattoo Studio wants to buy new laser therapy equipment. This new equipment would cost $300,000 to purchase and $20,000 to install. Marker’s estimates that this new equipment would yield incremental margins of $98,000 annually due to new client services. It would require incremental cash maintenance costs of $10,000 annually. Marker’s expects the life of this equipment to be 5 years. They estimate a terminal disposal value of $20,000. Marker’s has a 25% income tax rate and depreciates assets on a straight-line basis (to terminal value) for tax purposes. The required rate of return on investments is 10%. Determine the expected increase in annual net income from investing in the new equipment. Calculate the accrual accounting rate of return based on average investment. Summarize whether the new equipment is worth investing in from a net present value (NPV) standpoint. Suppose that the tax authorities are willing to let Marker’s depreciate the new equipment