BC Junction purchased some embroidering equipment for their Denver facility 3 years ago for $15,000. This equipment qualified as MACRS 5-year property. Maintenance costs are estimated to be $1000 this next year and will increase by $1000 per year thereafter. The market (salvage) value for the equipment is $10,000 at the end of this year

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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13-54 BC Junction purchased some embroidering
equipment for their Denver facility 3 years ago
for $15,000. This equipment qualified as MACRS
5-year property. Maintenance costs are estimated to
be $1000 this next year and will increase by $1000
per year thereafter. The market (salvage) value for
the equipment is $10,000 at the end of this year
and declines by $1000 per year in the future. If BC
Junction has an after-tax MARR of 30%, a marginal
tax rate of 28% on ordinary income, depreciation
recapture, and losses, what after-tax life of this pre-
viously purchased equipment has the lowest EUAC?
Transcribed Image Text:A 13-54 BC Junction purchased some embroidering equipment for their Denver facility 3 years ago for $15,000. This equipment qualified as MACRS 5-year property. Maintenance costs are estimated to be $1000 this next year and will increase by $1000 per year thereafter. The market (salvage) value for the equipment is $10,000 at the end of this year and declines by $1000 per year in the future. If BC Junction has an after-tax MARR of 30%, a marginal tax rate of 28% on ordinary income, depreciation recapture, and losses, what after-tax life of this pre- viously purchased equipment has the lowest EUAC?
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