McPherson Company must purchase a new milling machine. The purchase price is $33,000, including installation. The machine has a tax life of 5 years, and it can be depreciated according to the following rates. The firm expects to operate the machine for 4 years and then to sell it for $12,500. 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 Depreciation Rate

1 0.20

2 0.32

3 0.19

4 0.12

5 0.11

6 0.06

a. $11,784

b. $10,424

c. $10,900

d. $9,064

e. $9,744

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