7-43. Alternative Methods I and II are proposed for a security operation. The following is comparative information:

Method I Method II Initial investment $10,000 $40,000 Useful (ADR) life 5 years 10 years Terminal market value $1,000 $5,000 Annual expenses $14,500 $7,000 Determine which is the better alternative based on an after-tax annual cost analysis with an effective income tax rate of 40% and an after-tax MARR of 15%, assuming the following methods of depreciation: (7.9)

a. SL

b. MACRS