n asset used in a four-year project falls in the five-year MACRS cla ost of $7,200,000 and will be sold for $1,620,000 at the end of the project. If the tax rate is 24 percent, what is the aftertax salvage alue of the asset?

n asset used in a four-year project falls in the five-year MACRS cla ost of $7,200,000 and will be sold for $1,620,000 at the end of the project. If the tax rate is 24 percent, what is the aftertax salvage alue of the asset?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

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An asset used in a four-year project falls in the five-year MACRS class (MACRS schedule) for tax purposes. The asset has an acquisition"
cost of $7,200,000 and will be sold for $1,620,000 at the end of the project. If the tax rate is 24 percent, what is the aftertax salvage
value of the asset?
Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.
Aftertax salvage value

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