Question: Alternative Methods I and II are proposed for a security operation. The following is comparative information: Determine which is the better alternative based on an

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

Method / Method II Initial investment Useful (ADR) life Terminal market value Annual expenses $40,000 10 years $10,000 5

Determine which is the better alternative based on an after-tax annual cost analysis with an effective income tax rate of 40% and an after-tax MARR of 15%, assuming the following methods of depreciation:
a. SL
b. MACRS

Method / Method II Initial investment Useful (ADR) life Terminal market value Annual expenses $40,000 10 years $10,000 5 years $1,000 $14,500 $5,000 $7,000

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