A virtual mold apparatus for producing dental crowns permits an infinite number of shapes to be custom constructed based upon mold imprints taken by dentists. Two models are available. One costs \($58,500\) and is expected to last 9 years with no salvage value at that time. Costs of use are \($30\) per crown, and 5,000 crowns per year are produced. The other mold apparatus costs \($87,500,\) lasts 9 years, has no salvage value, and is less costly to use at \($25\) per crown. The dental supplier depreciates assets using MACRS but values the company’s assets using straight-line depreciation. The marginal tax rate is 40 percent, and MARR is an after-tax 10 percent.

a. Based upon the use of MACRS-GDS depreciation (be sure to state the property class), compare the after-tax AW of each alternative to determine which should be selected.

b. Based upon the use of straight-line (no half-year) depreciation, compare the after-taxAWof each alternative to determine which should be selected.