Full steps please A piece of equipment is purchased for $120000 and has...
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A piece of equipment is purchased for $120000 and has an estimated salvage value of $20000 at the end of 5 years. Annual revenues and annual operating costs are $50000 and $10000 respectively. Consider i=10% and tax rate of 50% over taxable income . A- Determine the annual equivalent of taxes paid in the 5-years analysis period if straight line depreciation is used. B- Determine the annual equivalent of the taxes paid if the MACRS method is used. The backhoe is 5 year class asset. Assume that incomes and costs will continue to be the same after the 5 year analysis period. C- Based on your answers in (a) and (b) which depreciation method would you recommended to the owner of this equipment? Why
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