An earth-moving company is contemplating an investment of $35,000 in equipment that will have a useful...

  

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An earth-moving company is contemplating an investment of $35,000 in equipment that will have a useful life of five years with a $5,000 salvage value at that time. The firm's income from cut and fill contracts due to the investment will total $10,600 per year for five years. The company pays taxes at a rate of 50%. Using the sum-of-the-years digit method of depreciation and after-tax MARR of 10%, should the firm undertake the investment? An earth-moving company is contemplating an investment of $35,000 in equipment that will have a useful life of five years with a $5,000 salvage value at that time. The firm's income from cut and fill contracts due to the investment will total $10,600 per year for five years. The company pays taxes at a rate of 50%. Using the sum-of-the-years digit method of depreciation and after-tax MARR of 10%, should the firm undertake the investment?

Answer rating: 100% (QA)

To determine whether the firm should undertake the investment we need to calculate the net present v... View the full answer