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An item with a 3-year MACRS property class for depreciation purposes is purchased for $30,000. It is sold at the end of 2 years for
An item with a 3-year MACRS property class for depreciation purposes is purchased for $30,000. It is sold at the end of 2 years for $12,000. Net annual benefits from the use of this item are $9, 800 in year 1 and $15, 824 in year 2. Fill up the following table to determine the company's after tax cash flow for this investment. Assume the company is in 35% marginal tax bracket. Further assume that income tax rates for capital gains or losses are also 35%. Write down the equation for computing the after tax rate of return for this investment. Do not compute the actual rate of return
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