Your company has purchased equipment (for $50.000) that will reduce materials and labor costs by $12,000 each year for N years. After N years, there will be no further need for the machine, and because the machine is specially designed, it will have no MV at any time. The RS, however, has ruled that you must depreciate the equipment c a SL basis with a tax life of five years. If the effective income tax rate is 35%, what is the minimum number of y must operate the equipment to eam 10% per year after taxes on investment Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year Your firm must operate the equipment for minimum years to earn 10% per year after taxes on its investment (Round your answer up to the nearest whole number)

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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Your company has purchased equipment (for $50.000) that will redoce materials and labor costs by $12,000 each year for N years. After N years, there will be no
further need for the machine, and because the machine is specially designed, it will have no MV at any time. The RS, however, has ruled that you must depreciate the
equipment on a SL basis with a tax life of five years. If the effective income tax rate is 35%, what is the minimum number of years your fem must operate the
equipment to earn 10% per year after taxes on its investment?
Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year
Your firm must operate the equipment for minimum years to earn 10% per year after taxes on its investment (Round your answer up to the nearest whole number)
Transcribed Image Text:← Your company has purchased equipment (for $50.000) that will redoce materials and labor costs by $12,000 each year for N years. After N years, there will be no further need for the machine, and because the machine is specially designed, it will have no MV at any time. The RS, however, has ruled that you must depreciate the equipment on a SL basis with a tax life of five years. If the effective income tax rate is 35%, what is the minimum number of years your fem must operate the equipment to earn 10% per year after taxes on its investment? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year Your firm must operate the equipment for minimum years to earn 10% per year after taxes on its investment (Round your answer up to the nearest whole number)
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