Question
The Basketball Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $528,272 is estimated to result in
The Basketball Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $528,272 is estimated to result in $202,934 in annual pretax cost savings. The press falls in the MACRS five-year class, and it will have a salvage value at the end of the project of $99,153. The shop's tax rate is 29 percent. What is the OCF for year 4?
ACRS Depreciation Table
Year Three-year Five-Year Seven Year
1 33.33% 20.00% 14.29%
2 44.45 32.00 24.49
3 14.81 19.20 17.49
4 7.41 11.52 12.49
5 11.52 8.93
6 5.76 8.92
7 8.93
8 4.46
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