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Q6. Pertinent information for two alternatives A and B is shown below. If i=10%/year and the effective income tax rate is 35%, answer the following

Q6.

Pertinent information for two alternatives A and B is shown below. If i=10%/year and the effective income tax rate is 35%, answer the following true/false questions.

Alt. A Alt.B
Basis, $ 150,000 225,,000
Gross Income (GI), $ 100,000 100,000
Operating Expense (OE), $ 30,000 10,000
Salvage Value, $ 15,000 22,500
MARCS Depreciation Method ADS-6: Years Recovery Period GDS: 5-Years Recovery Period

The book value (BV) of Alt. B at the end of year 3 is between $40,000-$45,000.

Group of answer choices

True

False

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