Question
Mayflower Logistics is considering a project with an initial fixed asset cost of $2.168 million which will be depreciated straight-line to a zero book value
Mayflower Logistics is considering a project with an initial fixed asset cost of $2.168 million which will be depreciated straight-line to a zero book value over the 10-year life of the project. At the end of the project the equipment will be sold for an estimated $495,000. The project will not directly produce any sales but will reduce operating costs by $634,000 a year. The tax rate is 21 percent. The project will require $128,000 of net working capital which will be recouped when the project ends. What is the aftertax salvage value of the fixed asset at the end of the project? Question 10 options: $391,050 $0 $495,000 $128,000 $216,800
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