Alternative Methods I and 71 are proposed for a security operation. The following is comparative information:

Determine which is the better alternative based on an after-tax annual cost analysis with an effective income tax of 40% and an after-tax MARR of 12%, assuming the following methods of depreciation:
a. SL
b. MACRS

Method/Method Il Initial investment Useful (ADR) life Terminal market value Annual expenses $40,000 5 years10 years $5,000 $10,000 $1,000 Labor Power Rent Maintenance Property taxes $12,000 $250 $1,000 500 $400 $4,000 $300 $500 $200 $2,000 and insurance Total annual expenses $14,150 $7,000