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A proposed cost-saving device has an installed cost of $760,000. The device will be used in a five-year project but is classified as three-year MACRS

image text in transcribedimage text in transcribedA proposed cost-saving device has an installed cost of $760,000. The device will be used in a five-year project but is classified as three-year MACRS property for tax purposes (MACRS schedule). The required initial net working capital investment is $65,000, the tax rate is 25 percent, and the project discount rate is 8 percent. The device has an estimated Year 5 salvage value of $100,000. What level of pretax cost savings do we require for this project to be profitable?

A proposed cost-saving device has an installed cost of $760,000. The device will be used in a five-year project but is classified as three-year MACRS property for tax purposes (MACRS schedule). The required initial net working capital investment is $65,000, the tax rate is 25 percent, and the project discount rate is 8 percent. The device has an estimated Year 5 salvage value of $100,000. What level of pretax cost savings do we require for this project to be profitable? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16 Table 9.7 Modified ACRS depreciation allowances

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