Redo Problem 14.10 with the following additional information. For tax purposes, the entire cost of $15,000

Question:

Redo Problem 14.10 with the following additional information.
• For tax purposes, the entire cost of $15,000 can be depreciated according to a five-year MACRS property class.
• The firm's marginal tax rate is 40%.
• The firm's after-tax is 12%.
In Problem 14.10
A special-purpose machine is to be purchased at a cost of $15,000. Table P14.10 shows the expected annual operating and maintenance cost and the s for each year of the machine's service.
(a) If the interest rate is 10%, what is the economic service life for this machine?
(b) Repeat part (a) using i = 15%. Salvage Value
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