Question
Southwest Airlines just bought a new jet for $26,000,000. The jet falls into the 7-year MACRS category, with the following depreciation rates (half-year convention): Year
Southwest Airlines just bought a new jet for $26,000,000. The jet falls into the 7-year MACRS category, with the following depreciation rates (half-year convention):
| Year | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Depr. rate | 14.29% | 24.49% | 17.49% | 12.49% | 8.93% | 8.92% | 8.93% | 4.46% |
The jet can be sold for $20,800,000 after 5 years. The company has a marginal tax rate of 34%.
What is the after-tax salvage value at the end of year 5?
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Private Equity Mathematics
Authors: Oliver Gottschalg
1st Edition
1908783508, 9781908783509
