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Economics

Question: Consider a piece of equipment that initially cost $8,000 and has these estimated annual expenses and MV:

End of Year, k Annual Expenses 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 0

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%.

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M92315672

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