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During those years the company has been profitable, and it expects to continue to be profitable in the foreseeable future. Peng Company is considering an investment expected to generate an average net income after taxes of $3,000 for three years. The cash inflow of each investment is as follows: Year Cash inflow A Cash inflow B Cash inflow C 1 $300 $500 $100 2 $300 $400 $2, Jimmy Co. is considering a 12-year project that is estimated to cost $1,050,000 and has no residual value. Assu, Peng Company is considering an investment expected to generate an average net income after taxes of $3,000 for three years. The investment costs $48,900 and has an estimated $12,000 salvage value. What is the investment's payback period? Amount X Peng Company is considering an investment expected to generate an average net income after taxes of $2,000 for three years. For example: What is the future value of $4,000 per ye ar for 6 years assuming an annual interest rate of 8%. (Get Answer) - Peng Company is considering buying a machine that will Accounting Rate of Return Choose Denominator: Choose Numerator: T = Accounting Rate of Return = Accounting rate of return 0, Required Information [The following information applies to the questions displayed below) Peng Company is considering an investment expected to generate an average net income after taxes of $1950 for three years. Crispen normally uses a 10 percent discount rate to evaluate projects but feels it should use 12 per. Compute the payback period. it is expected that: Initial cost $2,780,000 Annual cash inflow $2,540,000 Annual cash outflows $2,260,000 Estimated useful life 10 years Salvage value $4,400,000 Discount rate 8% Calculate the net pr, Lt. Dan Corporation invested $80,000 in a manufacturing equipment. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. Peng Company is considering an investment expected to generate an average net income after taxes of $2,900 for three years. gifts. The investment costs $47,400 and has an estimated $8,400 salvage value. The initial cost and estimates of the book value of the investment at the end of each year, the net cash flows for each year, and the net income, Drake Corporation is reviewing an investment proposal. Depreciation is calculated using the straight-line method. An asset costs $70,000 and is expected to have a $10,000 salvage value at the end of its 10-year life. What amount should Cullumber Company pay for this investment to earn a 12% return? QS 11-8 Net present value LO P3 Peng Company is considering an Assume Peng requires a 15% return on its investments. Which option should the company choose to invest in? t, A machine costs $380,000, has a $20,000 salvage value, is expected to last eight years, and will generate an after-tax income of $60,000 per year after straight-line depreciation. The machine will cost $1,796,000 and is expected to produce a $199,000 after-tax net income to be received at the end of each year. The amount to be invested is $210,000. c) 6.65%. #12 Peng Company is considering an investment expected to generate an average net income after taxes of $2,900 for three years. Peng Company is considering an investment expected to generate an average net income after taxes of $3,000 for three years. The investment costs $45,000 and has an estimated $6.000 salvage value. Peng Company is considering an investment expected to generate an Prepare the journal, You have the following information on a potential investment. (1) Determine whet, Lt. Dan Corporation invested $80,000 in a manufacturing equipment. The machine will cost $1,764,000 and is expected to produce a $191,000 after-tax net income to be received at the end of each year. turnover is sales div The estimated cash flow for the investment are as follows: N Description Cash flow ($) 0 price of the system Fo 1-4 revenue per, Joe Sixpack Inc. is considering an investment that will cost is $400,000. a) 2.85%. Yokam Company is considering two alternative projects. Peng Company is considering an investment expected to generate an The investment costs $52,200 and has an estimated $9,000 salvage value. Calculate its book value at the end of year 6. We reviewed their content and use your feedback to keep the quality high. What makes this potential investment risky? All rights reserved. Select chart Assume Peng requires a 10% return on its investments. Management predicts this machine has a 12-year service life and a $40,000 salvage value, and it uses straight-line depreciation. The initial outlay of the project would be $800,000 and the project's assets would have a residual value of $50,000 at the end o. What is the present value, Strauss Corporation is making a $87,550 investment in equipment with a 5-year life. It is considering investing in a project which costs $350,000 and is expected to generate cash inflows of $140,000 at the end of each year for three years. Free and expert-verified textbook solutions. Peng Company is considering an investment expected to generate an Dynamic modeling and analysis of multi-product flexible production line View some examples on NPV. After inputting the value, press enter and the arrow facing a downward direction. The company's required rate of return is 10% for this class of asset. Explain. Trading securities (fair value) = $70,000 Available-for-sale securities (fair value) = $40,000 Held-to-maturity securities (amortized cost) = $47,000 At what amount will Ahnen report investments in its current, A company is contemplating investing in a new piece of manufacturing machinery. ESG considerations, stock returns, and firm performance in Nordic The salvage value of the asset is expected to be $0. What is Ronis' Return on Investment for 2015? Learn about what net present value is, how it is calculated both for a lump sum and for a stream of income over multiple years. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Management estimates the machine will yield an after-tax net income of $12,500 each year. 8. Stop procrastinating with our smart planner features. The management of Bischke Corporation is investigating an investment in equipment that would have a useful life of 8 years. For example: How much would you need to invest today at 10% compounded semiannually to accumulate $5,000 in 6 years from today? You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Compute this machine's accounti, On 1/1, a company buys equipment with a cost of $8,100, an estimated salvage value of $1,100, and an estimated useful life of 7 years. The building has an estimated useful life of 40 years and an expected salvage value of $550,000. TABLE B.1 Present Value of 1 Rate Perlods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.8929 0.8696 0.9803 0.9612 0.9426 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 0.7972 0.7561 0.9706 0.9423 0.9151 0.8890 0.8638 0.8396 08163 .793 0.7722 7513 7118 06575 0.9610 0.9238 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355 0.5718 0.9515 0.9057 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674 0.4972 0.9420 0.8880 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066 0.4323 0.9327 0.8706 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523 0.3759 0.9235 0.8535 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039 0.3269 0.9143 0.8368 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606 0.2843 0.9053 0.8203 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220 0.2472 0.8963 0.8043 0.7224 0.6496 0.5847 0.5268 0.4751 0.4289 0.3875 0.3505 0.2875 0.2149 0.8874 0.7885 0.7014 0.6246 0.5568 0.4970 0.4440 0.3971 0.3555 0.3186 0.2567 0.1869 0.8787 0.7730 0.6810 0.6006 0.5303 0.4688 0.4150 0.3677 0.3262 0.2897 0.2292 0.1625 0.8700 0.7579 0.6611 0.5775 0.5051 0.4423 0.3878 0.3405 0.2992 0.2633 0.2046 0.1413 0.8613 0.7430 0.6419 0.5553 0.4810 0.4173 0.3624 0.3152 0.2745 0.2394 0.1827 0.1229 0.8528 0.7284 0.6232 0.5339 0.4581 0.3936 0.3387 0.2919 0.2519 0.2176 0.1631 0.1069 0.8444 0.7142 0.6050 0.5134 0.4363 0.3714 0.3166 0.2703 0.2311 0.1978 0.1456 0.0929 0.8360 0.7002 0.5874 0.4936 0.4155 0.3503 0.2959 0.2502 0.2120 0.1799 0.1300 0.0808 0.8277 0.6864 0.5703 0.4746 0.3957 0.3305 0.2765 0.2317 0.1945 0.1635 0.1161 0.0703 0.8195 0.6730 0.5537 0.4564 0.3769 0.3118 0.2584 0.2145 0.1784 0.1486 0.1037 0.0611 0.7798 0.6095 0.4776 0.3751 0.2953 0.2330 0.1842 0.1460 0.1160 0.0923 0.0588 0.0304 0.7419 0.5521 0.4120 0.3083 0.2314 0.174 0.1314 0.0994 0.0754 0.0573 0.0334 0.0151 0.7059 0.5000 0.3554 0.2534 0.1813 0.1301 0.0937 0.0676 0.0490 0.0356 0.0189 0.0075 0.6717 0.4529 0.3066 0.2083 0.1420 0.0972 0.0668 0.0460 0.0318 0.0221 0.0107 0.0037 9 10 12 13 14 15 16 18 19 20 25 30 35 40 * Used to compute the present value of a known future amount. The investment costs $54,000 and has an estimated $7,200 salvage value. Experts are tested by Chegg as specialists in their subject area. Assume the company uses straight-line depreciation. The projected incremental income from the investment is as follows: The unadjusted rate of return on the in, Shields Company has gathered the following data on a proposed investment project: (Ignore income taxes.) The investment costs $45,600 and has an estimated $8,700 salvage value. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. Assume the company uses straight-line . What is the return on investment? The machine will cost $1,800,000 and is expected to produce a $200,000 after-tax net income to be rece, A company can buy a machine that is expected to have a three-year life and a $25,000 salvage value. $1,950 for three years. Project 1 requires an initial investment of $400,000 and has a present value of cash flows of $1,100,000. EV of $1. Required information [The following information applies to the questions displayed below.) What is the cash payback period? d. Loss on investment. Assume the company uses straight-line depreciation. Carmino Company is considering an investment in equipment that is expected to generate an after-tax income of $5,000 for each year of its four-year life. The system requires a cash payment of $125,374.60 today. The investment costs $48,000 and has an estimated $10,200 salvage value. A negative NPV would suggest that the project is not worth investing since it will probably yield to a loss while a positive NPV would suggest otherwise. Assume Peng requires a 5% return on its investments. 2.72. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. Management predicts this machine has an 11-year service life and a $140,000 salvage value, and it uses s, A machine costs $400,000 and is expected to yield an after-tax net income of $9,000 each year. The machine will generate annual cash flows of $21,000 for the next three years. A company invests $175,000 in plant assets with an estimated 25-year service life and no salvage value. ), Summary of Strategic Management southern African concepts and case fourth edition, chapters 1 to 4, What of the following is not considered practice before the IRS per Circular 230? PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. The expected future net cash flows from the use of the asset are expected to be $595,000. Compute the net present value of this investment. Peng Company is considering an investment expected to generate an The investment costs $57,600 and has an estimated $6,000 salvage value. #define An irrigation canal contractor wants to determine whether he To help in this, compute the cost of capital for the firm for the following: a. investment costs $48,900 and has an estimated $12,000 salvage Compute the net present value of this investment. Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses straight-line depreciation. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. negative? Assume Peng requires a 5% return on its investments. A company is deciding to invest in a new project at a cost of $2 million dollars. The expected average rate of return, giving effect to depreciation on investment is 15%. It gives us the profitability and desirability to undertake the project at our required rate of return. The investment costs $45,300 and has an estimated $7,500 salvage value. Required information (The following information applies to the questions displayed below.] Assume the company uses straight-line . Calculate its book value at the end of year 10. 17 US public . Compute the net present value of this investment. a) Prepare the adjusting entries to report 1. Solved Peng Company is considering an investment expected to - Chegg Using the factors of n = 12 and i= 5% (12 semiannual periods and a semiannual rate of 5%), the factor is 0.5568. Answer is complete but user contributions licensed under cc by-sa 4.0, Peng Company is considering an investment expected to generate an average net income after taxes of $2,500 for three years. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. Peng Company is considering an investment expected to generate an average net income after taxes of $2,100 for three years. Capital investment - $15,000 Estimated useful life - 3 years Estimated salvage value - zero Estimated net cash inflow: -Year 1 - $7,00, Compute the net present value of each potential investment. Securities Cost Fair Value Trading 120,000 124,000 Non-trading 100,000 94,000 The non-trading securities are held as long-term investments. The amount to be invested is $100,000. Assume the company requires a 12% rate of return on its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Solved Peng Company is considering an investment expected to | Chegg.com The investment costs $58, 500 and has an estimated $7, 500 salvage value. The company is expected to add $9,000 per year to the net income. A machine costs $210,000, has a $16,000 salvage value, is expected to last nine years, and will generate an after-tax income of $47,000 per year after straight-line depreciation. Management estimates that this machine will generate annual after-tax net income of $540. The investment costs $45,000 and has an estimated $6,000 salvage value. It is considering investing in a project that costs $50,000 and is expected to generate cash inflows of $20,000 at the end of each year for 3 years. a) construct an influence diagram that relates these variables (PV of $1. 2. Anglemenesis Company is planning to spend $84,000 for a new machine that is to be depreciated on a straight-line basis over 10 years with no salvage value. Determine the net present value, and ind. Capital investment - $100,000 Estimated useful life - 3 years Estimated salvage value - zero Estimated net cash inflow Year 1 - $50,000 Year 2 - $47,000 Year 3 - $44,000 Required rate, You have the following information on a potential investment: Capital Investment - $100,000 Estimated useful life - 3 years Estimated salvage value - zero Estimated net cash inflow: Year 1 - $50,000 Y, Lt. Dan Corporation invested $90,000 in manufacturing equipment. b) define symbols and develop mathematical model, how does a change in each variable affect demand. The fair value of the equipment is $476,000. Reverse innovations are defined as "clean slate, super value products that are technologically advanced created to meet the unique needs of relevant segments, initially adopted in the emerging markets followed by the developed countries" (Malodia et al., 2020, p. 1010).The adjective "reverse" means the flow of innovation is from developing to developed economies. Compute the net present value of this investment. Select Chart Amount x PV Factor = Present Value Cash Flow Annual cash flow Residual value Net present value, Required information [The folu.ving information applies to the questions displayed below.) Compute the net present value of this investment. Compute. the net present value of this investment. Peng Company is considering an investment expected to generate an average net income after taxes of $2,200 for three years. [SOLVED] Peng Company is considering an investment expected Flower Company is considering an investment which will return a lump sum of $2,500,000 six years from now. 1, A machine costs $180,000 and will have an eight-year life, a $20,000 salvage value, and straight-line depreciation is used. Compute this machine s accoun, A machine costs $700,000 and is expected to yield an after-tax net income of $52,000 each year. A company is considering investing in a new machine that requires a cash payment of $47,947 today. Assume Peng requires a 10% return on its investments. Average invested assets are $500,000, and Avocado Company has an 8% cost of capital. Compute this machine's accoun, A machine costs $300,000 and is expected to yield an after-tax net income of $9,000 each year. Compute this machine's accou, A machine costs $300,000 and is expected to yield an after-tax net income of $9,000 each year. Management predicts this machine has a 9-year service life and a $140,000 salvage value, and it uses str, A machine costs $500,000 and is expected to yield an after-tax net income of $19,000 each year. Performance Evaluation of Production Lines in a Manufacturing Company Everything you need for your studies in one place. It expects the free cash flow to grow at a constant rate of 5% thereafter. 6 years c. 7 years d. 5 years. What is the accountin, A company buys a machine for $62,000 that has an expected life of 7 years and no salvage value. Select Chart Amount * PV Factor - Present Value Cash Flow Annual cash flow Residual value. We reviewed their content and use your feedback to keep the quality high. The cost of the asset is $700,000 and it will be depreciated using s, The MoMi Corporation's income before interest, depreciation and taxes, was $1.7 million in the year just ended, and it expects that this will grow by 5% per year forever. We reviewed their content and use your feedback to keep the quality high. Peng Company is considering an investment expected to generate an Compute the net present value of this investment. Assume Peng requires a 5% return on its investments. The asset has no salvage value. The investment costs $48,600 and has an estimated $6,300 salvage value. investment costs $51,600 and has an estimated $10,800 salvage The, Shep Corp. is considering a 20-year investment with a net present value of cash flows of -$20,800 and an uncertain salvage value. ABC Company is adding a new product line that will require an investment of $1,500,000. (PV of. It is mainly used to evaluate a prospective project whether it would be profitable to the investor or not. The excess cost over the book value of an investment that is due to expected above-average earnings is labeled on the consolidated balance sheet as: a. Goodwill. Cash flow 2003-2023 Chegg Inc. All rights reserved. Assume Peng requires a 5% return on its investments. Req, A company is contemplating investing in a new piece of manufacturing machinery. For ex ample: What is the present value of $2,000 per year for 10 years assuming an annual interest rate of 9%. A new operating system for an existing machine is expected to cost $690,000 and have a useful life of six years. Compute the payback period. Solved Peng Company is considering an investment expected to - Chegg The investment costs $51,900 and has an estimated $10,800 salvage value. Become a Study.com member to unlock this answer! Req, CPA corporation is considering an investment with a cost of $5,000,000 an estimate useful life of 5 years, and no salvage value. Assume Peng requires a 5% return on its investments. A machine costs $210,000, has a $14,000 salvage value, is expected to last ten years, and will generate an after-tax income of $43,000 per year after straight-line depreciation. They first apply the real options approach to assess the investment values as well as the distribution of energies such as biomass, coal, natural . (1) Determine wheth, Dartis Company is considering investing in a specialized equipment costing $600,000. Currently, U.S. Treasury bills are yielding 6.75% and the expected return for the S & P 500 is 18.2%. should purchase a used Caterpillar mini excavator, A) The distribution of exam scores for Statistics is normally Peng Company is considering an investment expected to generate an average net income after taxes of $3,400 for three years. Compute the net present value of this investment. View some examples on NPV. The investment costs $45,600 and has an estimated $8,700 salvage value. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction. Yokam Company is considering two alternative projects. The following information applies to the questions displayed below.J Peng Company is considering an investment expected to generate an average net income after taxes of $2,800 for three years. The investment costs $49,800 and has an estimated $11,400 salvage value. The company anticipates a yearly net income of $3,300 after taxes of 38%, with the cash flows to be received evenly throughout each year. Compute the net present value of this investment. TABLE B.3 Present Value of an Annuity of 1 Rat Periods 1% 2% 4% 5% 6% 7% 5% 10% 12% 15% 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.8929 0.8696 1.9704 1.9416 1.9135 1.88611.8594 1.8334 8080 1.7833 1.759 .7355 16901 1.6257 2.9410 2.8839 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4869 2.4018 2.2832 3.9020 3.8077 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.0373 2.8550 3.9927 3.8897 3.7908 3.6048 3.3522 5.7955 5.6014 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.1114 3.7845 5.3893 5.2064 5.0330 4.8684 4.5638 4.1604 7.6517 7.3255 7.0197 6.73276.4632 6.2098 5.9713 5.7466 5.5348 5.3349 4.9676 4.4873 8.5660 8.1622 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7590 5.3282 4.7716 9.4713 8.9826 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.6502 5.0188 7.1390 6.8052 6.4951 5.93775.2337 11.255 10.5753 9.95409.3851 8.8633 8.3838 7.9427 7.5361 7.1607 6.8137 6.1944 5.4206 12.1337 11.3484 10.6350 9.9856 9.3936 8.8527 8.3577 7.9038 7.4869 7.1034 6.4235 5.5831 13.0037 12.1062 11.2961 10.5631 9.8986 9.2950 8.7455 8.2442 7.7862 7.3667 6.6282 5.7245 13.8651 .8493 11.9379 11.1184 10.3797 9.7122 9.1079 8.5595 8.0607 7.6061 6.8109 5.8474 14.7179 13.5777 12.5611 11.6523 10.8378 10.1059 9.4466 8.8514 8.3126 7.8237 6.9740 5.9542 15.5623 14.2919 13.1661 12.1657 11.2741 10.4773 9.7632 9.1216 8.5436 8.0216 7.1196 6.0472 16.3983 14.9920 13.7535 12.6593 11.6896 10.8276 10.0591 9.3719 8.7556 8.2014 7.2497 6.1280 17.2260 15.6785 14.3238 13.1339 12.0853 11.1581 10.3356 9.6036 8.9501 8.3649 7.3658 6.1982 18.0456 16.3514 14.8775 13.5903 12.4622 11.4699 10.5940 9.8181 9.1285 8.5136 7.4694 6.2593 22.0232 19.5235 17.4131 15.6221 14.0939 12.7834 11.6536 10.6748 9.8226 9.0770 7.8431 6.4641 25.8077 22.3965 19.6004 17.2920 5.3725 13.7648 12.4090 11.2578 10.2737 9.4269 8.0552 6.5660 29.4086 24.9986 21.4872 18.6646 16.3742 14.4982 12.9477 11.6546 10.5668 9.6442 8.1755 6.6166 32.8347 27.3555 23.1148 19.7928 17.1591 15.0463 13.3317 11.9246 10.7574 9.7791 8.2438 6.6418 4.8534 4.7135 4.57974.4518 4.3295 4.2124 4.1002 6.7282 6.4720 6.2303 6.0021 5.7864 5.5824 10.3676 9.7868 26 8.7605 8.3064 7.8869 7.4987 12 13 14 15 16 19 20 25 30 35 40 Used to calculate the present value of a series of equal payments made at the end of each period. 7 years c. 6 years d. 5 years, The amount of the estimated average income for a proposed investment of $90,000 in a fixed asset, giving effect to depreciation (straight-line method), with a useful life of 4 years, no residual value. Assume Peng requires a 15% return on its investments. , ided by total investment.. total investment is current assets (inventories, accounts receivables and cash) plus fixed assets. Assume the company uses straight-line depreciation. The company has an all-equity capital structure, and its cost of equity capital is 15 percent. The payback period for this investment is: a) 3.9 years b) 3 years, Hung Company accumulates the following data concerning a proposed capital investment: cash cost of $216, 236, net annual cash flows of $43,800, and present value factor of cash inflows for 10 years 5.22 (rounded). If t, Your company just bought an asset for $200,000 with an estimated useful life of 5 yrs, and a salvage value of $10,000. Carbon capture and storage (CCS) brings new entrants to subsurface exploration and reservoir engineering who require very high levels of confidence in the technology, in the geological analysis and in understanding the risks before committing large The investment costs $45,000 and has an estimated $6,000 salvage value. Note: NPV is always a sensitive problem bec. The investment costs $49,000 and has an estimated $8,800 salvage value. Using the orig, A building has a cost of $500,000 and accumulated depreciation of $40,000. Empirical Evolution of the WTO Security Exceptions Clause and China's Present value The company's required r, Strauss Corporation is making an $85,900 investment in equipment with a 5-year life. What method, A machine costs $400,000 and is expected to yield an after-tax net income of $9,000 each year. The investment costs $45,000 and has an estimated $6,000 salvage value. Capital investment $900,000 Estimated useful life 6 years Estimated salvage value zero Estimated annual net cash inflow $213,000 Required, Sparky Company invested in an asset with a useful life of 5 years. Peng Company is considering an investment expected to generate an average net income after taxes of $3,300 for three years. Sign up for free to discover our expert answers. Peng Company is considering an investment expected to generate Ignoring taxes, what is the most that the company would be willing to in, Strauss Corporation is making a $89,600 investment in equipment with a 5-year life.The company uses the straight-line method of depreciation and has a tax rate of 40 percent.The company's required rat, Strauss Corporation is making a $89,750 investment in equipment with a 5-year life.The company uses the straight-line method of depreciation and has a tax rate of 40 percent.The company's required rat, Strauss Corporation is making a $91,950 investment in equipment with a 5-year life.