7. Consider a piece of equipment that initially costs $8,000 and has these estimated annual expenses and market values for 8 years (as shown in Table 1). If this equipment is depreciated as a MACRS (GDS) five year-property class asset, the effective income tax rate is 30%, and the after-tax MARR is 6%, show the EUAC of this asset for each year and determine its economical life? (20%) Table 1 EOY, K Annual Expenses MV at EOY 1 -$3,000 $4,700 2 -3,000 3,200 3 -3,500 2,200 -4,000 1,450 -4,500 950 -5,250 -6,250, -7,750 4 5 6 7 8 600 300 0
7. Consider a piece of equipment that initially costs $8,000 and has these estimated annual expenses and market values for 8 years (as shown in Table 1). If this equipment is depreciated as a MACRS (GDS) five year-property class asset, the effective income tax rate is 30%, and the after-tax MARR is 6%, show the EUAC of this asset for each year and determine its economical life? (20%) Table 1 EOY, K Annual Expenses MV at EOY 1 -$3,000 $4,700 2 -3,000 3,200 3 -3,500 2,200 -4,000 1,450 -4,500 950 -5,250 -6,250, -7,750 4 5 6 7 8 600 300 0
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:7. Consider a piece of equipment that initially costs $8,000 and has these estimated annual expenses
and market values for 8 years (as shown in Table 1). If this equipment is depreciated as a MACRS
(GDS) five year-property class asset, the effective income tax rate is 30%, and the after-tax MARR
is 6%, show the EUAC of this asset for each year and determine its economical life? (20%)
Table 1
ΕΟΥ, Κ
Annual Expenses
MV at EOY
1
-$3,000
$4,700
2
-3,000
3,200
3
-3,500
2,200
4
-4,000
1,450
-4,500
950
-5,250
600
-6,250,
300
-7,750
0
5
6
7
8
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