Calculate the equivalent annual after-tax cost

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Question - As the director of a construction firm, you are considering buying a new cement mixing truck for $103, 000. At the end of its useful life of 5 years, you expect to be able to sell it for $4,300. The mixing truck is expected to have annual operating and maintenance expenses of $2,300. Your cement-mixing truck is expected to depreciate for tax purposes at a declining balance rate of 25%. The corporate income tax rate is 30%. Your company's WACC is 11%. Assume the asset pool remains open after selling the item. Calculate the equivalent annual after-tax cost, the half-year rule should be used where applicable. Round your answer to the nearest dollar.

Reference no: EM132995228

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