Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 60

Bart is an economic consultant to the textile industry. In both a small business and a large corporation he performed economic evaluations that have an average 18% per year before-tax return. If the stated MARR in both companies is 12% per year after taxes, determine if management at both companies should accept the projects. The before-tax return is used to approximate the after-tax return. Effective tax rates are 34% for the larger corporation and 28% for the small company.