A machine costs $100,000 to purchase and has a 4 year depreciation life. Its maintenance cost during the first year is $12,000. The market value (salvage) at the end of the first year is expected to be $85,000. If the tax rate is 30%, what is the cost of operating this machine over the first year?

The financial manager in an auto component manufacturing firm is considering the following information concerning a piece of equipment:

Question	Answer
What is the cost of operating the machine during the first year (using method shown in lecture notes)?