Which of the alternatives described below is more economical if

(a) the assets are depreciated on a straight-line basis,

(b) the tax rate is $40 \%$, and

(c) the after-tax MARR is $6 \%$ ?

1. How does the outcome change if this was a before-tax analysis?
2. What is the after-tax result if the life had to be shortened by 3 years?
3. Describe the difference between a before-tax and after-tax MARR.
4. Perform a parametric analysis on the corporate tax rate and explore what impact this might have on decision-making.

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A. Asset investment Investment Cash Flow $12,000 $18,500 B. Salvage value $750 $3,000 C. Life (years) 8 8 D. Operating cost $2,000 $1,000