Minimum attractive rate of return

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Reference no: EM131810365

A corporation with $7 million in annual taxable income is considering two alternatives:

1391_annual taxable income.png

Both alternatives will be depreciated by straight-line depreciation assuming a 10-year depreciable life and no salvage value. Neither alternative is to be replaced at the end of its useful life. If the corporation has a minimum attractive rate of return of 10% after taxes, which alternative should it choose? Solve the problem by:

(a) Present worth analysis

(b) Annual cash flow analysis

(d) Future worth analysis

(e) Benefit-cost ratio analysis

Reference no: EM131810365

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