What is the after-tax rate of return

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Reference no: EM13974821

Beasley Worldwide Data Destruction (BWDD) purchases a new computing center for $200 million. They estimate a life of 5 years and a salvage value of $40 million. BDWW uses MACRS depreciation in the five year category. They also estimate revenue at $100 million a year.

a) What is the Before-Tax Rate of Return?

b) If they pay 50% income taxes, what is the After-Tax Rate of Return?

c) If BDWW’s Before-Tax MARR is 30% and their After-Tax MARR is 17%, should they do this project? Why?

Reference no: EM13974821

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