Is considering the purchase of manufacturing equipment with a 10-year midpoint in its asset depreciation range and the deprecation schedule is attached. the asset will cost $80,000, and it will produce earnings before depreciation and taxes of $28,000 per year for three years, and then $12,000 a year for seven more years. the firm has a tax rate of 34 percent. with a cost of capital of 12 percent, should it purchase the asset? explain your reasoning. year depreciation base annual depreciation 1 $80,000 $11,440 2 80,000 19,600 3 80,000 14,000 4 80,000 10,000 5 80,000 7,120 6 80,000 7,120 7 80,000 7,120 8 80,000 3,600 $80,000
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The answer is replenished