Consider purchasing a $50,000 SUV that youexpect

Consider purchasing a $50,000 SUV that youexpect to last for 10 years. The IRS uses a MACRS 5-year depreciation schedule on cars. It allowsdepreciating 20% in year 1, 32%, 19.2%, 11.52%, 11.52%, and 5.76% in the following years. You canfinance this car yourself. You can produce income of $100,000 per year with it. Maintenance costswill be $5,000 per year. Your income tax rate is 30% per annum. Your cost of capital is 12% perannum.

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