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Question: A company purchases an asset that costs $


A company purchases an asset that costs $10,000. This asset qualifies as 3-year property under MACRS. The company uses an after-tax discount rate of 12% and faces a 40% income tax rate.
(a) Use the appropriate present value factors found in Appendix C, Table 1, to determine the present value of the depreciation deductions for this firm over the specified 4-year period.
(b) Use the built-in NPV function in Excel to verify your answer.

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