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Question: The gas drilling company, North Eastern Star, (which makes decisions based on a discount rate of 10%, is considering the purchase of a natural gas powered turbine generator to replace its aging fleet of diesel generators for producing power at job sites. The gas turbine generator will cost $85,000. Through fuel savings, the generator will result in a net income of $18,000 annually. The generator will have a design life of 12 years. Using 10-ycar straight line and 10-year MACRS depreciation schedules, graph and compare the NPV payback periods for the generator under both depreciation scenarios assuming a flat income tax rate of 35%.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M92815318

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