ABC Corp is considering purchasing a cost saving device has an expected annual pre-tax savings of $26,000
It will be depreciated for tax
purposes on a declining balance basis at 40% and its life will be 5 years
The tax rate is 11% and the required rate of return on investments of this type are 8%
The organization expects an inflation rate of 6%
Assume - salvage value on the equipment of $1000
How much will they be willing to pay
Answer for both the 1/2 year rule and accelerated method