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Two fixtures are being considered for a particular job in a manufacturing firm. The pertinent data for their comparison are summarized in the following
Two fixtures are being considered for a particular job in a manufacturing firm. The pertinent data for their comparison are summarized in the following table. The effective federal and state income tax rate is 25%. Depreciation recapture is also taxed at 25%. If the after-tax MARR is 8% per year, which of the two fixtures should be recommended? Assume repeatability. Capital investment Annual operating expenses Useful life Market value Fixture X $30,000 $3,000 6 years $6,000 Depreciation method SL to zero book value over 5 years Fixture Y $40,000 $2,500 8 years $4,000 MACRS (GDS) with 5-year recovery period Click the icon to view the GDS Recovery Rates (r) for the 5-year property class. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 8% per year. Calculate the AW value for the Fixture X. AWX (8%)=$-6830 (Round to the nearest dollar.) Calculate the AW value for the Fixture Y. AWY (8%) = $ (Round to the nearest dollar.)
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