Two fixtures are being considered for a particular job in a manufacturing firm. The pertinent data for their comparison are summarized in Table P7-39.
The effective federal and state income tax rate is 50%. Depreciation recapture is also taxed at 50%. If the after-tax MARR is 8% per year, which of the two fixtures should be recommended? State any important assumptions you make in your analysis.

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TABLE P7 -39 Table for Problem 7-39 Capital investment Annual operating expenses Useful life Market value Depreciation method Fixture X $30,000 $3,000 6 years $6,000 SL to zero book Fixture Y $40,000 $2,500 8 years $4,000 MACRS (GDS) with 5-year recovery period value over 5 vearS