Business, 09.11.2019 01:31 ehklu1226

Danny is trying to determine if he should purchase equipment of this business this year or next year. he is currently in the 28% tax bracket and will be able to expense the equipment in the year he purchases it. with the new equipment, he believes that his marginal rate will increase to 33% next year. the cost of the equipment is $20,000 and his after-tax rate of return is 6%. calculate the after-tax cost of the equipment for both years and choose the correct statement below.

a. the after-tax cost of the equipment is $14,400 this year or $13,400 next year. danny should purchase the equipment this year.
b. the after-tax cost of the equipment is $14,400 this year or $13,776 next year. danny should purchase the equipment next year.
c. the after-tax cost of the equipment is $14,400 this year or $13,400 next year. danny should purchase the equipment next year.
d. the after-tax cost of the equipment is $14,400 this year or $13,776 next year. danny should purchase the equipment this year.

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Danny is trying to determine if he should purchase equipment of this business this year or next year...

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