Calculate her after-tax rate of return if she bought

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Question: Granny's Butter and Egg Business is such that she pays an effective tax rate of 40%. Granny is considering the purchase of a new Turbo Churn for $25,000. This churn is a special handling device for food manufacture and has an estimated life of 4 years and a salvage value of $5000. The new churn is expected to increase net income by $8000 per year for each of the 4 years of use. Granny works with an after-tax MARR of 10% and uses MACRS depreciation. Calculate her after-tax rate of return if she bought the churn and decide if she should buy it.

Reference no: EM133428398

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