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Business, 04.07.2020 23:01 masie03

A company purchased modular office furniture for its two new office branches, A and B. MACRS with a 7-year recovery period was used to write off the investment. The following information was prepared for the economic evaluation. Alternative A B First costs $35,000 $44,500 Annual maintenance costs $1500 in year 1 and increasing by $150 each year thereafter $12,000 Salvage value $3100 Life, years 8 8 However, the company expects to close branch A and sell the furniture at the end of year 5 for $20,000. Determine which is the better alternative based on an after-tax annual worth analysis with an effective tax of 40% and an after-tax MARR of 8% per year.

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