Your civil engineering co

Your civil engineering co

Your civil engineering consulting firm is going to purchase a new computer-aided design (CAD)system at a cost of $100,000. The CAD system will have no salvage value at the end of itsuseful life of 5 years. Your company?s income, minus allowable expenses, is about $300,000 peryear, and your tax rate is 50%. You expect a rate-of-return of 10 percent on your purchase of theCAD system. Compare the present worth of the depreciation of the CAD system using: (1)straight-line depreciation and (2) Modified Accelerated Cost Recovery System (MACRS).(Note: The present worth of the depreciation is the present value of the money you will save onyour taxes by accounting for the depreciation.).

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