Post-tax Alternative Evaluation Exercises

7. There are 2 construction plans, which you want to evaluate based on the present value after tax, use the double declining balance depreciation method; the term depreciation is equal to the service period for each alternative The main data are:

Plan A Plan B

Initial investment 4 ,500 10,000

Annual disbursements 1,000 720

Annual maintenance cost increase 200 100

Useful Life 6 Years 12 Years

Null salvage value null Rate of return after tax: 6% (Both)

Tax ratio or tax rate: 35% (both)