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Biotech, a medical imaging and modeling company, must purchase a bone cell analysis system for use by a team of bioengineers and mechanical engineers studying
Biotech, a medical imaging and modeling company, must purchase a bone cell analysis system for use by a team of bioengineers and mechanical engineers studying bone density in athletes. This particular part of a three year contract with the NBA will provide additional gross income of $100,000 per year. The effective tax rate is 35%. Estimate for the two alternatives are summarized below. Answer the following questions: The Biotech president, who is tax conscious, wishes to use a criterion of minimizing total taxes incurred over the three years of the contract. Which analyzer should be purchased? Do not consider the time value of money. Assume that three years have passed and the company is about to sell the analyzer. Using the same total tax criterion, did either analyzer have an advantages? Assume the selling price is $130,000 for analyzer 1, or $225,000 for analyzer 2, the same as its first cost
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