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3. A firm has invested $30000 in equipment with a 5-year useful life. The machinery will have no salvage value. The annual benefits from the
3. A firm has invested $30000 in equipment with a 5-year useful life. The machinery will have no salvage value. The annual benefits from the machinery are $7000 for the first year and increase by $1000 per year. Assume a combined 40% income tax rate, and the firm uses the straight-line depreciation. (a) (10 points) Compute the before tax IRR. O 12%/year O 13%/year 14%/year O 15%/year (b) (10 points) Compute the after-tax IRR. O 8%/year 9%/year O 10%/year O 11%/year
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