You have just started up a new company in NS that produces software for the waste management industry. You need to invest $100,000 immediately to purchase computer equipment (CCA class number 45 with a CCA rate of 45% and no salvage value). The investment is comprised of $50,000 cash and $50,000 from a bank loan charging an effective annual interest rate of 4% with annual payments. If the anticipated operating costs (excluding your salary) are $15,000 per year increasing at 5% per year and the anticipated revenue is $70,000 per year increasing at 3% per year, what constant amount can you withdraw each year as salary ( ver the four-year life of the project if you want to make 5% per year (return on your investment)?
You have just started up a new company in NS that produces software for the waste management industry. You need to invest $100,000 immediately to purchase computer equipment (CCA class number 45 with a CCA rate of 45% and no salvage value). The investment is comprised of $50,000 cash and $50,000 from a bank loan charging an effective annual interest rate of 4% with annual payments. If the anticipated operating costs (excluding your salary) are $15,000 per year increasing at 5% per year and the anticipated revenue is $70,000 per year increasing at 3% per year, what constant amount can you withdraw each year as salary ( ver the four-year life of the project if you want to make 5% per year (return on your investment)?
Excel Applications for Accounting Principles
4th Edition
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Gaylord N. Smith
Chapter26: Capital Budgeting (capbud)
Section: Chapter Questions
Problem 5R
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![You have just started up a new company in NS that produces software for the waste management
industry. You need to invest $100,000 immediately to purchase computer equipment (CCA class number
45 with a CCA rate of 45% and no salvage value). The investment is comprised of $50,000 cash and
$50,000 from a bank loan charging an effective annual interest rate of 4% with annual payments. If the
anticipated operating costs (excluding your salary) are $15,000 per year increasing at 5% per year and the
anticipated revenue is $70,000 per year increasing at 3% per year, what constant amount can you
withdraw each year as salary ( ver the four-year life of the project if you want to make 5% per year (return
on your investment)?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F828ce15e-5110-4547-95d6-c4d8b77d9cae%2F10e23b4d-0c93-42de-ada7-1cb2c591e470%2Fz6oitls_processed.png&w=3840&q=75)
Transcribed Image Text:You have just started up a new company in NS that produces software for the waste management
industry. You need to invest $100,000 immediately to purchase computer equipment (CCA class number
45 with a CCA rate of 45% and no salvage value). The investment is comprised of $50,000 cash and
$50,000 from a bank loan charging an effective annual interest rate of 4% with annual payments. If the
anticipated operating costs (excluding your salary) are $15,000 per year increasing at 5% per year and the
anticipated revenue is $70,000 per year increasing at 3% per year, what constant amount can you
withdraw each year as salary ( ver the four-year life of the project if you want to make 5% per year (return
on your investment)?
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