4. A fırm purchased $120,000 worth of light general- purpose trucks. The operations of the trucks lead to annual income of $50,000 for years 1-4. These trucks were then sold for $20,000 at the end of year 4. Assume a 36% combined tax rate. With a 40% bonus depreciation plus MACRS depreciation, do the following. a) Calculate the before-tax IRR. (b) Calculate the after-tax IRR.

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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4. A fırm purchased $120,000 worth of light general-
purpose trucks. The operations of the trucks lead
to annual income of $50,000 for years 1-4. These
trucks were then sold for $20,000 at the end of
year 4. Assume a 36% combined tax rate. With a
40% bonus depreciation plus MACRS
depreciation, do the following.
a)
Calculate the before-tax IRR.
(b)
Calculate the after-tax IRR.
Transcribed Image Text:4. A fırm purchased $120,000 worth of light general- purpose trucks. The operations of the trucks lead to annual income of $50,000 for years 1-4. These trucks were then sold for $20,000 at the end of year 4. Assume a 36% combined tax rate. With a 40% bonus depreciation plus MACRS depreciation, do the following. a) Calculate the before-tax IRR. (b) Calculate the after-tax IRR.
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