Explain machine on the basis of after-tax present, Operation Management

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A low-cost airline operating in South Africa is considering adding either Boeing 737-400 or Boeing 737-800 to its fleet. The following information is prepared for the economic evaluation. Either aircraft is to be used for 5 years and sold for the estimated salvage value. Assume the double declining balance is used for tax purposes in this country and the airline's before-tax MARR is 6.00% per year and the effective tax rate is 35%. Select a machine on the basis of after-tax present worth analysis.


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