Question
Salim is considering the purchase of a backhoe for his pipeline con- tracting firm. The machine will cost $110 000, last six years with
Salim is considering the purchase of a backhoe for his pipeline con- tracting firm. The machine will cost $110 000, last six years with a salvage value of $20 000, and reduce annual maintenance, insurance, and labour costs by $30 000 per year. The after-tax MARR is 9 percent and Salim's cor- porate tax rate is 55 percent. What is the exact after-tax IRR for this invest- ment? What is the approximate after-tax IRR? Should Salim buy the backhoe?
Step by Step Solution
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The aftertax IRR for this investment can be calculated using the following formula IRR Aftertax cash ...
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Financial Accounting and Reporting a Global Perspective
Authors: Michel Lebas, Herve Stolowy, Yuan Ding
4th edition
978-1408066621, 1408066629, 1408076861, 978-1408076866
