1. Identify costs that a chemical plant may incur after 20 years of operation (in connection with a planned closing of the plant).
2. In capital-budgeting analysis, what is meant by the income tax effect? Give three examples of the tax effect pertaining to the acquisition of new factory (manufacturing) equipment.
3. "Book value of an existing asset that we are contemplating replacing is nothing but a bookkeeper's figure and, as such, is irrelevant in capital-expenditure analysis." Do you agree? Why or why not?