Question: A small - business corporation is considering whether to replace some equipment in the plant. An analysis indicates there are five alternatives in addition to

A small

-

business corporation is considering whether to replace some equipment in the plant. An analysis indicates there are five alternatives in addition to the do

-

nothing option, Alt.

A .

The alternatives have a

5 -

year useful

59

life with no salvage value. Straight

-

line depreciation would be used.

The firm has a combined federal and state income tax rate of

26 % .

If the corporation expects a

8 %

after

-

tax rate of return for any new investments, which alternative should be selected?

A small-business corporation is considering whether to replace some equipment in

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