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Question: You can buy a crane for $100,000 that will bring an annual income of $20,000 in year-0 dollars. The service life of the equipment is 10 years and it will be depreciated using straight line method with a salvage value of $10,000. The annual inflation rate is 2% and your combined tax rate is 20%. Assuming you will sell this crane for its book value at the end of 1st year, what is the present worth of this equipment assuming your after tax real MARR is 4%?

a. $1,548

b. $1,896

c. $1,962

d. $2,866

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M92598229

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