Question: Continuing from previous problem - If Corleone Inc. after Tax MARR is 10%: Previous problem: Corleone Inc. is considering adding some automatic equipment to its
Continuing from previous problem - If Corleone Inc. after Tax MARR is 10%: Previous problem: Corleone Inc. is considering adding some automatic equipment to its production facilities. An investment of $100,000 will produce an initial annual benefit of $36,000, but the benefits are expected to decline $2,000 per year, making second-year benefits $34,000, third-year benefits $32,000, and so forth. The firm uses straight-line depreciation, an 8-year useful life and no salvage value at the end of the 8 years. Corleone Inc.s tax rate is 40%. The after tax net present worth is? The after tax internal rate of return is?
Should the project be funded or rejected based on after tax analsis?
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