Question
A biotech company has an effective income tax rate of 40%. Depreciation recapture is also taxed at 40%. The company must choose one of the
A biotech company has an effective income tax rate of 40%. Depreciation recapture is also taxed at 40%. The company must choose one of the following mutually exclusive cryogenic freezers for its tissue samples. The aftertax MARR is 10% per year. Hint: Solve the problem in tabular format and then answer the following question.
| Freezer 1 | Freezer 2 | |
| Capital Investment | $35,000 | $45,000 |
| Annual Operating Expenses | $2,500 | $3,000 |
| Useful Life (years) | 6 | 8 |
| Depreciation Method | SL To zero book value over 5 years | MACRS (GDS) with 5-year recovery period |
| Actual MV at end of useful life | $7,000 | $12,000 |
Which freezer should be selected based on after-tax annual worth?
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How To Analyse Bank Financial Statements
Authors: Thomas Padberg
1st Edition
0857195182, 978-0857195180
