A Construction Company Has an Effective Income Tax Rate of 38

A construction company has an effective income tax rate of 38%. The company must purchase one of the following two models of tower cranes for its new project. The
after- tax MARR is 12% per year. Select a crane on the basis of present worth of the EVA estimates using MACRS with a 5- year recovery period. $$\begin{array} { | l | l | c | } \hline \text { Machine } & \text { Model Q } & \text { Model R } \\\hline \text { First costs } & \$ 21,000 & \$ 22,000 \\\hline \text { Net Annual Revenue } & \$ 15,500 & \$ 15,800 \\\hline \text { Market Value at the end of useful life } & \$ 1100 & \$ 2100 \\\hline \text { Life, years } & 6 & 6 \\\hline\end{array}$$