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Relativity Inc. bought a new fully automated machining cell (MACRS-GDS 3 year property) that costs $250,000 and has a planned salvage value of $17,000 after
Relativity Inc. bought a new fully automated machining cell (MACRS-GDS 3 year property) that costs $250,000 and has a planned salvage value of $17,000 after a useful life of 4 years. The tool generates a net savings of $47,000 per year. The total effective corporate tax rate is 23 percent. What is E, the CFAT in year 3? Year 0 PW of CFAT $(250,000) 1 CFBT Depr. TI Tax CFAT $(250,000) $ 47,000 $ 83,325 $ (36,325) $ (8,355) $ 55,355 $ 47,000 $ 111,125 $ (64,125) $ (14,749) D $ 47,000 A B E F 2. G 3 . Where CFBT = Cash Flow Before Tax; Depr - Depreciation; TI = Taxable Income; Tax = Tax; CFAT = Cash Flow After Tax; PWOFCFAT = Present Worth of Cash Flow After Tax. Your
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