Look at Table 13-4 and answer these questions: a. Why is the net salvage value shown in

Question:

Look at Table 13-4 and answer these questions:

a. Why is the net salvage value shown in Section III reduced for taxes?

b. How is the change in depreciation computed?

c. What would happen if the new machine resulted in a reduction in net working capital?

d. Why are the cost savings shown as a positive amount?

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...