Question: Rework Problem 12.11, assuming the following additional information: The machine is classified as a seven-year MACRS recovery period. The tax rate is 40%, and the

Rework Problem 12.11, assuming the following additional information:

The machine is classified as a seven-year MACRS recovery period. The tax rate is 40%, and the after-tax MARR is 10%.

Data From Problem 12.11

A special-purpose machine is to be purchased at a cost of $30,000. The following table shows the expected annual operating and maintenance cost and the salvage value for each year of service: Year of Service O&M Cost Market Value $5,000 $25,800 $16,000 $6,500 $10,000 $10,000 $12,500 4 $5,000 $0 $14,800

If the interest rate is 12%, what is the economic service life for this machine?

Year of Service O&M Cost Market Value $5,000 $25,800 $16,000 $6,500 $10,000 $10,000 $12,500 4 $5,000 $0 $14,800

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At i 10 and tax rate 40 the economic service life is 1 year Tax Rate MARR Holding Period 0 1 2 3 4 5 ... View full answer

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