Two concrete test instrument investment alternatives qualify for different property classes. Investment A has a cost of $22,000, a useful life of 6 years with a salvage value of $2,000 at that time, and an annual cost of use and maintenance of $9,500. Also, suppose it is eligible for a 3-year property class. Investment B has a cost of $29,000, a useful life of 6 years with a salvage value of $3,000 at that time, and an annual cost of use and maintenance of $7,500. It is in the 5-year property class. The marginal tax rate is 40 percent, and MARR is an after-tax 12 percent. 

Determine which investment is less costly, based upon comparison of after-tax annual worth.

Answer rating: 100% (QA)

To compare the aftertax annual worth of both investments we need to calculate the annual depreciation aftertax annual cost of use and maintenance and aftertax annual depreciation for each investment T... View the full answer