Question: Problem 3. (25%) A company is considering purchasing a backhoe that will cost $110,000. It will last 6 years with a salvage value of $20,000

Problem 3. (25%) A company is considering purchasing a backhoe that

Problem 3. (25%) A company is considering purchasing a backhoe that will cost $110,000. It will last 6 years with a salvage value of $20,000 and will reduce maintenance and operating costs by $30,000. The after-tax MARR of the company is 9%, the CCA rate is 20% and the tax rate is 55%. a) What is the exact after-tax IRR for this investment? b) What is the approximate after-tax IRR? c) Should the company buy the backhoe? Problem 3. (25%) A company is considering purchasing a backhoe that will cost $110,000. It will last 6 years with a salvage value of $20,000 and will reduce maintenance and operating costs by $30,000. The after-tax MARR of the company is 9%, the CCA rate is 20% and the tax rate is 55%. a) What is the exact after-tax IRR for this investment? b) What is the approximate after-tax IRR? c) Should the company buy the backhoe

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