A company planned to invest $200,000 to add some equipments in it's production line. This new equioments will produce $50,000 benefits per year. The firm uses 30% bonus depreciation with the balance using 7-year MACRS depreciation. The equipment can be sold for $15,000 as a salvage value at the end of its 10-year useful life. Determine the decision to buy the equipments is acceptable or not. Assume, the after-tax MARR is 10% and income tax rate is 25% (federal and state combined).

A company planned to invest $200,000 to add some equipments in it's production line. This new equioments will produce $50,000 benefits per year. The firm uses 30% bonus depreciation with the balance using 7-year MACRS depreciation. The equipment can be sold for $15,000 as a salvage value at the end of its 10-year useful life. Determine the decision to buy the equipments is acceptable or not. Assume, the after-tax MARR is 10% and income tax rate is 25% (federal and state combined).

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Description: A company planned to invest $200,000 to add some equipments in it's production line.This new equioments will produce $50,000 benefits per year. The firm uses 30% bonusdepreciation with the balance using 7-year MACRS depreciation. The equipment can b

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 2P

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