End of Year, k Expenses Annual MV at End of Year 1 $3,000 $4,700 2 3,000 3,200 3 3,500 2,200 4 4,000 1,450 5 4,500 950 6. 5,250 600 7 6,250 300 8 7,750

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Consider a piece of equipment that initially cost $8,000 and has these estimated annual expenses and MV: If the after-tax MARR is 7% per year, determine the after-tax economic life of this equipment. MACRS (GDS) depreciation is being used (five-year property class). The effective income tax rate is 40%.

End of
Year, k Expenses
Annual
MV at End
of Year
1
$3,000
$4,700
2
3,000
3,200
3
3,500
2,200
4
4,000
1,450
5
4,500
950
6.
5,250
600
7
6,250
300
8
7,750
Transcribed Image Text:End of Year, k Expenses Annual MV at End of Year 1 $3,000 $4,700 2 3,000 3,200 3 3,500 2,200 4 4,000 1,450 5 4,500 950 6. 5,250 600 7 6,250 300 8 7,750
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