Question
Marshall-Miller & Company is considering the purchase of a new machine for $50,000, installed. The machine has a tax life of 5 years, and it
Marshall-Miller & Company is considering the purchase of a new machine for $50,000, installed. The machine has a tax life of 5 years, and it can be depreciated according to the depreciation rates below. the firm expects to operate the machine for 4 years and then to sell it for $6,500. If the marginal tax rate is 40%, what will the after-tax salvage value be when the machine is sold at the end of year 4? Year 1 depreciation rate 0.20, year 2 depreciation rate 0.32, year 3 depreciation rate 0.19, year 4 depreciation rate 0.12, year 5 depreciation rate 0.11, year 6 depreciation rate 0.06 a) $8,468 b) $5,986 c) $6,424 d) $7,300 e) $7,884
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