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Explaination or formula on how to get each number would be greatly appreciated! Your company is purchasing a new piece of equipment for $35,000 and
Explaination or formula on how to get each number would be greatly appreciated!
Your company is purchasing a new piece of equipment for $35,000 and will keep it indefinitely. For accounting purposes, the equipment will be depreciated straight-line for three years to an ending book value of $5,000. Your company's tax rate is 35% and the OCC is 12%. Calculate the net cost of the equipment in PV terms. Suppose the equipment will be scrapped at year 4 for $8,000. Suppose the equipment will be resold at year 2 for $20,000. Suppose the equipment will be scrapped at year 4, but projected inflation is raised by 3% per year. Correspondingly, the OCC is raised to 15%Step by Step Solution
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