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5. ABC rental car company purchased 10 new cars for a total cost of $200,000. The cars generated income of $185,000 per year and incurred
5. ABC rental car company purchased 10 new cars for a total cost of $200,000. The cars generated income of $185,000 per year and incurred annual operating cost of $100,000. ABC uses MACRS depreciation and its marginal tax rate is 34%%. The 10 cars were sold at the end of the third year for a total of $70.000. Assume MARR is 15%/year. (a) (10 pts) Compute the before-tax irr. O 25.5% O 32 2% O 28.8% O 22.3% Question 9 10 pts (b) (10 pts) Compute the after-tax irr. O 15.6% O 12.8% O 17.2% 19.6%
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