Joanne runs a construction business. Joanne operates her business as a sole proprietorship and expects to be in a 35% marginal tax rate for all years pertinent to this decision. Joanne intends to purchase a new SUV at the beginning of 2021 for use in her construction business (100% business use) that she will use for 6 years and then give the vehicle to her son for college. She is considering the following two vehicles:

(1) Mercedes-Benz AMG GLS 63: purchase price = $135,000.

(2) Mercedes-Benz AMG G 63: purchase price = $160,000.

The AMG GLS 63 gross vehicle weight is approximately 5,900 pounds. The AMG G 63 weighs in at a hefty 6,600. Because the AMG G 63 is a larger and more expensive vehicle, annual operating costs are estimated to be about $1,500 more per year than the AMG GLS 63. (For simplicity, assume these costs are incurred at year-end.)

REQUIRED: Perform a discounted cash-flow analysis of the two SUVs to determine if Joanne would minimize her after-tax costs by acquiring the AMG GLS 63 or the AMG G 63. You should take into account any elections that provide optimal income tax outcome.

In making your calculations, assume the following: Joanne will pay cash at the beginning of 2021 for either vehicle her purchases; 35% marginal tax rate for all years (assume all at year-end); 6% discount rate to compute the present value of future cash flows;

depreciation rates for as follows: 2021 Luxury Limits yr 1 $18,200,yr 2 16,400, yr 3 9,800,yr 4 5,860,yr 5 5,860,yr 6 5,860

Normal MACRS Rates yr1 20.0% , yr2 32.0%, yr3 19.2% , yr4 11.52% ,yr5 11.52% , yr6 5.76%

Please show all work I've been struggling on this! Will give thumb up and a comment if correct