1. A rancher is planning on purchasing additional raw land. Assume that the marginal tax rate is 15%. Assume further that IRS will allow the investor to depreciate machinery investments using straight-line over 10 years. If the initial cost of an investment is $42,000. What is the annual depreciation expense for tax purposes?
$3,333.33
$4,200
$6,300
$6,666.67
None of the answers are correct
2. A farmer is considering the purchase of additional land to expand operations. The marginal tax rate is 20% and He requires at least a 13% pre-tax, risk free return on capital and a 3% risk premium on projects on comparable risk. What is the after-tax, risk adjusted discount rate? r=[rbt +PREM](1-m)
12.8%
19.2%
8%
12%
None of the answers are correct