Which freezer should select based on after-tax present worth

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Question: A biotech company has an effective income tax rate of 40%. Recaptured depreciation is also taxed at the rate of 40%. The company must choose one of the following mutually exclusive cryogenic freezers for its tissue samples. The after-tax MARR is 12% per year. Which freezer should be selected based on after-tax present worth?
                                                                Freezer 1                      Freezer 2
Capital investment                                        $10,000                        $30,000
Annual benefit                                              $3,000                         $9,000
Depreciation method                                        SL                              MACRS
Depreciable life                                             3 years                        3 years
IRS approved SV for                                      $2,000                              $0
depreciation Useful life                                   5 years                        5 years
Actual MV at end of                                      $2,000                         $2,000
useful life

Reference no: EM131506326

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