A piece of newly purchased industrial equipment costs $948,000. Assume the equipment is depreciated straight-line to zero over its six-year tax life.

What is the book value at the end of Year 5 for this equipment?

$342,000

$250,000

$474,000

$316,000

$158,000

The equipment is to be used in a five-year project. The relevant income tax rate is 22 percent, and the capital gains tax rate is 15 percent. If the equipment can be sold for $250,000 at the end of its project life, what is the after-tax salvage value from the sale of this equipment?

$296,540

$321,340

$275,420

$229,760

$194,810