Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Your firm needs a computerized machine tool lathe which costs $59,000 and requires $12,900 in
maintenance for each year of its 3-year life. After three years, this machine will be replaced. The
machine falls into the MACRS 3-year class life category, and neither bonus depreciation nor
Section 179 expensing can be used. Assume a tax rate of 21 percent and a discount rate of 12
percent.
If the lathe can be sold for $5,900 at the end of year 3, what is the after-tax salvage value?
Note: Round your answer to 2 decimal places.
Answer is complete but not entirely correct.
Salvage value after tax
$
5,380.45
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Transcribed Image Text:Your firm needs a computerized machine tool lathe which costs $59,000 and requires $12,900 in maintenance for each year of its 3-year life. After three years, this machine will be replaced. The machine falls into the MACRS 3-year class life category, and neither bonus depreciation nor Section 179 expensing can be used. Assume a tax rate of 21 percent and a discount rate of 12 percent. If the lathe can be sold for $5,900 at the end of year 3, what is the after-tax salvage value? Note: Round your answer to 2 decimal places. Answer is complete but not entirely correct. Salvage value after tax $ 5,380.45
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