Question: A large profitable corporation is considering two mutually exclusive capital investments: Alt A Alt B Initial cost $11.000 $33,000 Uniform annual benefit 3,000 9,000 End-of-depreciable-life
A large profitable corporation is considering two mutually exclusive capital investments:
Alt A Alt B
Initial cost $11.000 $33,000
Uniform annual benefit 3,000 9,000
End-of-depreciable-life 2,000 3,000
Depreciation method SL SOYD
End-of -useful-life 2,000 5,000
Salvage value obtained
Depreciable life, in years 3 4
Useful life, in years 5 5
If the firm's after-tax minimum attractive rate of return is 12% and its incremental income tax rate is 34%, which project should be selected?
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