Six years ago, a company purchased $30,000 of equipment. The equipment has just been sold for $5000. The equipment was depreciated using 50% bonus depreciation / 50% MACRS (using a 5-year recovery period). The actual savings due to the purchase of the equipment is shown below. The firm's MARR is 12% and it's tax rate is 25%. What is the after-tax present worth of the investment?

Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter21: Costs And The Supply Of Goods
Section: Chapter Questions
Problem 17CQ
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Six years ago, a company purchased $30,000 of equipment. The equipment has just been sold for $5000. The equipment was depreciated using 50% bonus depreciation / 50% MACRS (using a 5-year recovery period). The actual savings due to the purchase of the equipment is shown below. The firm's MARR is 12% and it's tax rate is 25%. What is the after-tax present worth of the investment?

 

Year 1 2 3 4 5 6
Savings 5000 6000 7000 7000 4000 3000
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