What value should you use for your before-tax rate of return

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Reference no: EM131898704

Break-even analysis: The Y Generation Soda Bottling Company purchased equipment for $50,000 that will reduce costs by $14,000 each year for N years. After N years, there will be no further need for the machine, and it will have no salvage value. Assume that the equipment will be depreciated on a straight-line basis over five years. If the effective income-tax rate is 40%, what is the minimum value of N that will ensure an after-tax rate of return of at least 10%?

Assume that your state tax rate is 7%, and your federal tax rate is 33%. If you want at least a 10% rate of return after taxes, what value should you use for your before-tax rate of return?

Reference no: EM131898704

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