An asset used in a four year project falls in the five year MACRS class for tax

Question:

An asset used in a four year project falls in the five year MACRS class for tax purposes. The asset has an acquisition cost of $7,900,000 and will be sold for $1,400,000 at the end of the project. If the tax rate is 35 percent what is the after-tax salvage value of the asset?

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...