An after-tax analysis for a new $50,000 machine proposed for a fiber opticsmanufacturing line is in process. The CFBT for the machine is estimated at$20,000. If a recovery period of 5 years applies, use the present-worth-of-taxes criterion, an effective tax rate of 35%, and a return of 8% per year to compare the following: straight line, DDB, and MACRS depreciation. Use a 6-year period to accommodate the MACRS half-year convention.
An after-tax analysis for a new $50,000 machine proposed for a fiber opticsmanufacturing line is in process. The CFBT for the machine is estimated at$20,000. If a recovery period of 5 years applies, use the present-worth-of-taxes criterion, an effective tax rate of 35%, and a return of 8% per year to compare the following: straight line, DDB, and MACRS depreciation. Use a 6-year period to accommodate the MACRS half-year convention.
Chapter19: Lease And Intermediate-term Financing
Section: Chapter Questions
Problem 2P
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An after-tax analysis for a new $50,000 machine proposed for a fiber optics
manufacturing line is in process. The CFBT for the machine is estimated at
$20,000. If a recovery period of 5 years applies, use the present-worth-of-taxes criterion, an effective tax rate of 35%, and a return of 8% per year to compare the following: straight line, DDB, and MACRS depreciation. Use a 6-year period to accommodate the MACRS half-year convention.
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