A proposed cost-saving device has an installed cost of $835,000. 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 $95,000, the tax rate is 25 percent, and the project discount rate is 11 percent. The device has an estimated Year 5 salvage value of $145,000. What level of pretax cost savings do we require for this project to be profitable?

Table 9.7 Modified ACRS depreciation allowances

Year	Property Class
	3-Year	5-Year	7-Year
1	33.33%	20.00%	14.29%
2	44.45	32.00	24.49
3	14.81	19.20	17.49
4	7.41	11.52	12.49
5		11.52	8.93
6		5.76	8.92
7			8.93
8			4.46

Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.

Pretax cost savings