1. A company is evaluating a new 4-year project. The equipment necessary for the project will cost $3,450,000 and can be sold for $710,000 at the end of the project. The asset is in the 5-year MACRS class. The depreciation percentage each year is 20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, and 11.52 percent, respectively. The company's tax rate is 40 percent. What is the after-tax salvage value of the equipment? Select one: a. $505,488 b. $710,000 c. $664,464 d. $755,536 e. $426,000
2. You can invest in an account that pays simple interest or an account that pays compound interest. In either case, you plan to invest $3,600 today and both accounts have an annual interest rate of 8 percent. How much more interest will you receive in the 7th year in the account that pays compound interest? Select one: a. $169.02 b. $186.18 c. $181.87 d. $182.69 e. $288.00.