economic decision analysis

2. A small back-hoe is purchased for $12,000 and has an estimated salvage value of $2,000 at the end of 5 years. Annual revenues and annual operating co excluding depreciation, are $5,000 and $1,000 respectively. If i = 10% and the firm's tax rate is considered to be 50%, a) Determine the annual equivalent of "taxes paid for the 5-year analysis period if straight line depreciation is used. b) Determine the annual equivalent of the "taxes paid" if the MACRS method is used. The backhoe is considered to be a 5-year class asset. Assume that incomes and costs will continue to be the same after the 5-year analysis period. c) Based on your answers in (a) and (b), which depreciation method would you recommend? Why? 2. A small back-hoe is purchased for $12,000 and has an estimated salvage value of $2,000 at the end of 5 years. Annual revenues and annual operating co excluding depreciation, are $5,000 and $1,000 respectively. If i = 10% and the firm's tax rate is considered to be 50%, a) Determine the annual equivalent of "taxes paid for the 5-year analysis period if straight line depreciation is used. b) Determine the annual equivalent of the "taxes paid" if the MACRS method is used. The backhoe is considered to be a 5-year class asset. Assume that incomes and costs will continue to be the same after the 5-year analysis period. c) Based on your answers in (a) and (b), which depreciation method would you recommend? Why