Salim is considering the purchase of a backhoe for his pipeline contracting firm. The machine will cost £110 000, last six years with a salvage value of £20 000, and reduce annual maintenance, insurance, and labour costs by £30 000 per year. The after-tax ALARR is 9%, and Salim's corporate tax rate is 55%. Wha t is the exact after-tax IRR for this investment? Wha t is the approximate after-tax IRR for this investment? Should Salim buy the backhoe?
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