A firm has invested $30000 in equipment with a 5-year useful life. The machinery will have no salvage value. The annual benefits from the machinery are $7000 for the first year and increase by $1000 per year. Assume a combined 30% incremental (federal and state) income tax rate, straight-line depreciation, and MARR of 9%/year. a) Compute the before-tax present worth PW (9%). b) Compute the after-tax present worth. c) Compute the after-tax present worth, if 20% bonus depreciation is used.
A firm has invested $30000 in equipment with a 5-year useful life. The machinery will have no salvage value. The annual benefits from the machinery are $7000 for the first year and increase by $1000 per year. Assume a combined 30% incremental (federal and state) income tax rate, straight-line depreciation, and MARR of 9%/year. a) Compute the before-tax present worth PW (9%). b) Compute the after-tax present worth. c) Compute the after-tax present worth, if 20% bonus depreciation is used.
Chapter1: Making Economics Decisions
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Time Left: 00:09:05
A firm has invested $30000 in equipment with a 5-year useful life. The machinery will have no salvage value. The annual
benefits from the machinery are $7000 for the first year and increase by $1000 per year. Assume a combined 30%
incremental (federal and state) income tax rate, straight-line depreciation, and MARR of 9%/year.
a) Compute the before-tax present worth PW (9%).
b) Compute the after-tax present worth.
c) Compute the after-tax present worth, if 20% bonus depreciation is used.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2348598c-5f2c-4c41-9169-5f4583a23805%2F19be27b8-f699-4cdc-ae46-efb2ca1a015b%2Ftwpjk8s_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Student question
Time Left: 00:09:05
A firm has invested $30000 in equipment with a 5-year useful life. The machinery will have no salvage value. The annual
benefits from the machinery are $7000 for the first year and increase by $1000 per year. Assume a combined 30%
incremental (federal and state) income tax rate, straight-line depreciation, and MARR of 9%/year.
a) Compute the before-tax present worth PW (9%).
b) Compute the after-tax present worth.
c) Compute the after-tax present worth, if 20% bonus depreciation is used.
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