If a firm's after-tax minimum attractive rate of return is 10% and its combined incremental...
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If a firm's after-tax minimum attractive rate of return is 10% and its combined incremental income tax rate is 28%, which alternative should be selected? Use incremental IRR. Alt. A Alt. B Initial cost $11,000 $33,000 Uniform annual benefit 3,000 9,000 End-of-depreciable-life 2,000 3,000 salvage value Depreciation method 40% bonus 40% bonus plus MACRS plus MACRS End-of-useful-life 2,000 5,000 salvage value obtained Depreciable life, in years Useful life, in years 5 If a firm's after-tax minimum attractive rate of return is 10% and its combined incremental income tax rate is 28%, which alternative should be selected? Use incremental IRR. Alt. A Alt. B Initial cost $11,000 $33,000 Uniform annual benefit 3,000 9,000 End-of-depreciable-life 2,000 3,000 salvage value Depreciation method 40% bonus 40% bonus plus MACRS plus MACRS End-of-useful-life 2,000 5,000 salvage value obtained Depreciable life, in years Useful life, in years 5
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