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Question

Kahnemann Kookies is evaluating the replacement of an old oven with a new, more energy efficient model. The old oven cost $50,000, is 5 years old and is being depreciated over a life of 10 years to a value of $0.00. The new oven costs $60,000 and will be depreciated over 5 years with no salvage value. Kahnemann uses straight line depreciation, its tax rate is 40%. Compute;a. the change in annual depreciation that would result from purchasing the new machine.;b. the change in taxes each year that would result from purchasing the new machine.

 

Paper#77652 | Written in 18-Jul-2015

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