A company is considering the purchase of a new machine for $50,000, installed. The machine has a tax life of 5 years, and it can be depreciated according to the depreciation rates below. The firm expects to operate the machine for 4 years and then to sell it for $5,000. If the marginal tax rate is 40%, what will the after-tax salvage value be when the machine is sold at the end of Year 4? Year Depreciation Rate 1 0.20 2 0.32 3 0.19 4 0.12 5 0.11 6 0.06 Group of answer choices $6,464 $6,720 $7,232 $5,504 $6,400
A company is considering the purchase of a new machine for $50,000, installed. The machine has a tax life of 5 years, and it can be depreciated according to the depreciation rates below. The firm expects to operate the machine for 4 years and then to sell it for $5,000. If the marginal tax rate is 40%, what will the after-tax salvage value be when the machine is sold at the end of Year 4? Year Depreciation Rate 1 0.20 2 0.32 3 0.19 4 0.12 5 0.11 6 0.06 Group of answer choices $6,464 $6,720 $7,232 $5,504 $6,400
Chapter19: Lease And Intermediate-term Financing
Section: Chapter Questions
Problem 2P
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Question
A company is considering the purchase of a new machine for $50,000, installed. The machine has a tax life of 5 years, and it can be depreciated according to the depreciation rates below. The firm expects to operate the machine for 4 years and then to sell it for $5,000. If the marginal tax rate is 40%, what will the after-tax salvage value be when the machine is sold at the end of Year 4?
Year |
Depreciation Rate |
1 |
0.20 |
2 |
0.32 |
3 |
0.19 |
4 |
0.12 |
5 |
0.11 |
6 |
0.06 |
Group of answer choices
$6,464
$6,720
$7,232
$5,504
$6,400
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