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A company has two investment alternatives. The initial investments used to buy fixed asset, annual revenues and costs, depreciation methods, depreciable life and salvage values
A company has two investment alternatives. The initial investments used to buy fixed
asset, annual revenues and costs, depreciation methods, depreciable life and salvage
values are as follows. The effective income tax rate is The aftertax MARR is
a Please calculate the annual depreciation amounts for two alternatives.
b Please draw the diagrams of Beforetax Net Cash Flow for altemative B
c If the repeatability assumption is available, which alternative should be
recommended?
d Please draw the diagrams of Aftertax Net Cash Flow for alternative B
e If the soterminated assumption is available and assuming that the asset of
alternative B has a market value $ at the end of year which alternative
should be recommended when the income tax is involved?
Answer questions ac first.
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