How much can a firm afford spend for this assetand

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An asset with a cost basis of $100,000 and an ADS* recovery period of five years is placed in service and is expected to generate net cash flows of $30,000 per year during its 6 years useful life. Its salvage value is expected then to be negligible. If the company uses an after-tax MARR of 10% and the effective income tax rate is 40%, how much can a firm afford spend for this assetand still earn the MARR?

Reference no: EM13186392

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