A oilfield service company purchased a pump for $275,000.00 and expended $25,000.00 for shipping and instalation. The addition of this pump will result in an increase in revenues of $70,000.00 but will also increase expenses by $8,000.00 each year. The pump has a GDS recovery period of 5 years, and the effective tax rate is 40%
1) What is the ATCF for the fourth year of service of the asset
a) $47,022.00
b) $49,555.00
c) $50,031.00
d) $51,024.00
2) What is the EVA for year 4 if their after tax MARR is 7%
a) $10,416.00
b) $10,616.00
c) $10,943.00
d) $11,016.00