Use the after-tax IRR (internal rate of return) method to evaluate the following three alternatives for a MACRS 3-year property, and oer a recommendation on which one should be preferred. The project life is 3 years. The rm has a combined income tax rate of 35%.
Alternatives Initial cost Annual cost savings Salvage value
A 15,000 2500 5000
B 18,000 1000 9,000
C 10,000 5000 0
Hint: you need to use the MACRS depreciation percentage rate table