Pertinent information for two alternatives A and B is shown below. If i=10%/year and income tax rate is 40%, answer the following true/false questions. Alt. A Alt.B Basis, $ CFBT, $ MACRS Recovery, Years Salvage Value, $ Useful Life, Years 200,000 40,000 5 20,000 6 300,000 50,000 5 30,000 7

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter6: Accounting For Financial Management
Section: Chapter Questions
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Pertinent information for two alternatives A and B is shown below. If i=10%/year and the effective
income tax rate is 40%, answer the following true/false questions.
Alt. A
Alt.B
300,000
50,000
Basis, $
CFBT, $
MACRS Recovery, Years
Salvage Value, $
Useful Life, Years
O True
200,000
O False
40,000
5
20,000
6
The CFAT of Alt. B at the end of year 1 is less than $5,000.
5
30,000
7
Transcribed Image Text:Pertinent information for two alternatives A and B is shown below. If i=10%/year and the effective income tax rate is 40%, answer the following true/false questions. Alt. A Alt.B 300,000 50,000 Basis, $ CFBT, $ MACRS Recovery, Years Salvage Value, $ Useful Life, Years O True 200,000 O False 40,000 5 20,000 6 The CFAT of Alt. B at the end of year 1 is less than $5,000. 5 30,000 7
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