1.The company that purchased the asset above had the following gross income using this paver. Compute their net income assuming that depreciation is their only expense and compute the tax they need to pay, given that they are in a 31% tax bracket (they pay 31% tax on their net income=gross income tax).

Year

Gross Income

1

280,000

2

550,000

3

320,000

4

25,000 (a bad year for sales)

5

120,000

6

70,000

For the problem above, what is the post-tax IRR of purchasing this equipment? Ignore inflation.

1.The company that purchased the asset above had the following gross income using this paver. Compute their net income assuming that depreciation is their only expense and compute the tax they need to pay, given that they are in a 31% tax bracket (they pay 31% tax on their net income=gross income tax).

Year

Gross Income

1

280,000

2

550,000

3

320,000

4

25,000 (a bad year for sales)

5

120,000

6

70,000

For the problem above, what is the post-tax IRR of purchasing this equipment? Ignore inflation.