Thomas completed a study of a $1 million 3-yearold DNA analysis and modeling system that DynaScope Enterprises wants to keep for 1 more year or dispose of now. His table (in $1000 units) details the analysis, including an anticipated $100,000 selling price (SP) at the end of next year, SL depreciation, taxes at the all inclusive rate of Te=52%,T e =52%, and PW at the after-tax MARR of 5% per year. Thomas recommends retention since PW &gt; 0. Critique the analysis to determine if he made the correct recommendation. Year CFBT SP SL Depr. TI Taxes CFAT 0−1000−100012752502513262227525025132623275250251326242751002502513362 PW at 5% 11.3

Question

Thomas completed a study of a $1 million 3-yearold DNA analysis and modeling system that DynaScope Enterprises wants to keep for 1 more year or dispose of now. His table (in $1000 units) details the analysis, including an anticipated $100,000 selling price (SP) at the end of next year, SL depreciation, taxes at the all inclusive rate of Te=52%,T e ​ =52%, and PW at the after-tax MARR of 5% per year. Thomas recommends retention since PW &amp;gt; 0. Critique the analysis to determine if he made the correct recommendation.  Year  CFBT  SP  SL Depr.  TI  Taxes  CFAT 0−1000−100012752502513262227525025132623275250251326242751002502513362 PW at 5% 11.3

Cristiano Sears · Accepted Answer

The tax in year for did not account for depreciation recapture. FIxing that changes the present worth to 13.1238, which doesn’t affect the decision to keep the asset for one more year and then sell it.

Thomas completed a study of a $1 million 3-yearold DNA analysis and modeling system that DynaScope wants to keep for 1 more year or dispose of now.

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