Alternatives qualify for different property classes

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Reference no: EM133980910

Question

Two concrete test instrument investment alternatives qualify for different property classes. Investment A has a cost of $22,000, a useful life of 6 years with a salvage value of $2,000 at that time, and an annual cost of use and maintenance of $9,500. Also, suppose it is eligible for a 3-year property class. Investment B has a cost of $29,000, a useful life of 6 years with a salvage value of $3,000 at that time, and an annual cost of use and maintenance of $7,500. It is in the 5-year property class. The marginal tax rate is 40 percent, and MARR is an after-tax 12 percent. Determine which investment is less costly, based upon comparison of after-tax annual worth.

Reference no: EM133980910

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