Question
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
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. The required initial net working capital investment is $95,000, the marginal 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? MACRS schedule (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
pretax cost saving?
Property Class Year Three-Year Five-Year Seven-Year 20.00% 1 33.33% 14.29% 2 44.45 32.00 24.49 14.81 19.20 17.49 4 7.41 11.52 12.49 11.52 8.93 5 6 5.76 8.92 8.93 7 4.46 8Step by Step Solution
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