Effective income tax rate

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Reference no: EM13774341

Device A costs $100000 initially, whereas devise B costs $140000. Maintenenance will be $4500 for devise A and $2750 for devise B in the first year. These maintenance costs will increase 12% per year.

The company uses a six year study period, and its effective income tax rate is 50%. Both devices qualify as a five year MACRS GDS property. Which device should the company choose if the after tax, market based MARR is 7% per year (im)?

a) The PW of device A is ___

b) The PW of the device B is ____

c) Which device should you choose?

Reference no: EM13774341

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