Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

detailed please A company is investigating two freezers to choose from for its tissue samples. Both freezers have a useful life of 5 years. Freezer

image text in transcribed
detailed please
A company is investigating two freezers to choose from for its tissue samples. Both freezers have a useful life of 5 years. Freezer 1 has a capital investment of $16,000. Its net annual benefit is $3,500 per year and it can be sold for $4,000 at the end of its useful life. This asset is depreciated using the Straight Line (SL) method with the recovery period of only 3 years (which means that there is no depreciation in years 4 and 5 within the useful life). The salvage value approved by IRS for depreciation is also $4,000. Freezer 2 has a capital investment of $25,000. Its annual benefit per year is $10,000 and its market value at the end of its useful life is $3,000. This asset is depreciated using the MACRS (GDS) method with the recovery period of 3 years. Which freezer should be selected based on after-tax present worth? The effective income tax rate is 40% and after-tax MARR is 10% per year

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Belverd E Needles, Marian Powers

10th Edition

0547193289, 9780547193281

More Books

Students also viewed these Finance questions

Question

List t he t hree c omponents of ident ity. (p. 3 0)

Answered: 1 week ago