Basis for depreciation, Plan B allows a 7% credit with a

Basis for depreciation

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Reference no: EM131810151

Senator Paula Stevens wants to revise the investment tax credit. If most firms use an interest rate of 15% and are taxed at 34%, which plan is more attractive to them? Plan A allows a 10% credit with a 10-year MACRS schedule. Plan B allows a 7% credit with a 5-year MACRS schedule. For both plans, the credit is subtracted from the basis for depreciation.

Reference no: EM131810151

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