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Find the equivalent annual cost for a machine that costs $50,000 today, is depreciated straight-line to zero over its 5-year life and has pre-tax maintenance costs of $3,000 per year. There is no salvage value. Your tax rate is 34% and your discount rate is 15 %.

Find the equivalent annual cost for a machine that costs $50,000 today, is depreciated straight-line to zero over its 5-year life and has pre-tax maintenance costs of $3,000 per year. There is no salvage value. Your tax rate is 34% and your discount rate is 15 %.

Essentials Of Investments
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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Find the equivalent annual cost for a machine that costs $50,000 today, is depreciated straight-line to zero over its 5-year life and has pre-tax maintenance costs of $3,000 per year. There is no salvage value. Your tax rate is 34% and your discount rate is 15%.
Transcribed Image Text:Find the equivalent annual cost for a machine that costs $50,000 today, is depreciated straight-line to zero over its 5-year life and has pre-tax maintenance costs of $3,000 per year. There is no salvage value. Your tax rate is 34% and your discount rate is 15%.
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