Danny is trying to determine if he should purchase equipment for his business this year or next year. He is currently in the 28% tax bracket and will be able to expense the equipment in the year he purchases it. With the new equipment, he believes that his marginal rate will increase to 33% next year. The cost of the equipment is $20,000 and his after-tax rate of return is 6%. Calculate the after-tax cost of the equipment for both years and choose the correct statement below.

( need a clear explanation to understand)

Thank you

Year 4% 5% 6% 7% 1 2 3 4 5 .962 .925 .889 .855 .822 .952 .907 .864 .823 .784 .943 .890 .840 .792 .747 .935 .873 .816 .763 .713