Problem
Consider a piece of equipment that initially cost $8,000 and has these estimated annual expenses and MV:
End of Annual MV at End
Year, k Expenses of Year
1 $3,000 $4,700
2 3,000 3,200
3 3,500 2,200
4 4,000 1,450
5 4,500 950
6 5,250 600
7 6,250 300
8 7,750 0
If the after-tax MARR is 7% per year, determine the after-tax economic life of this equipment. MACRS (GDS) depreciation is being used (five-year property class). The effective income tax rate is 40%.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.