Effective tax rate, Granny’s Butter and Egg Business is

Effective tax rate

Reference no: EM13690967

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 special handing 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. If Granny works with an after-tax MARR of 10% and uses MACRS depreciation, should she buy the churn?

Reference no: EM13690967

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