Classified as seven-year property under macrs

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Reference no: EM132009353

1. Describe a company where leadA piece of newly purchased industrial equipment costs $1,240,000 and is classified as seven-year property under MACRS. Calculate the annual depreciation allowances and end-of-the-year book values for this equipment.ership chose a grand strategy that went dismally awry. What went wrong?

2. Your firm is contemplating the purchase of a new $425,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $30,000 at the end of that time. You will save $130,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $60,000 (this is a one-time reduction). If the tax rate is 35 percent, what is the IRR for this project?

Reference no: EM132009353

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