A company has purchased equipment ( for $52000) that will reduce materials and labor costs by $12000 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. I IRS, however has ruled that the company must depreciate the equipment on a SL basis with a tax life of 5 years. If the effective income tax rate is 36% what is the minimum number of years the company must operate the equipment to earn 10% per year after taxes on it's investment >
a) Your firm must operate the equipment for the minimum ___ years to earn 10% per year after taxes on its investment.