If a straight-line depreciation method is used

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Reference no: EM131292122

A Caribbean cruise line has purchased a new cruise ship for $670,000 and expects to realize a net revenue of $190,000.00 each year for the next 10 years. The estimated salvage value of the ship at the end of its useful life of 10 years is $52,000. Assume an effective federal tax of 40%, state income tax of 10.75% per year, and an after-tax MARR of 14% per year. If a straight-line depreciation method is used, the equation below correctly represent the effective tax rate.

Effective tax rate (t) = 0.4 + (0.4)(1 - 0.1075) True or Fasle?

Reference no: EM131292122

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