The Mobile Oil Company has just purchased an asset they intend to use in their business. The machine has a cost of $25m and they intend to depreciate this for 5 years straight line. The taxation office has determined that this be depreciated over 7 years straight line however the accountant at Mobile has stated that 5 years must be used for any calculations.

The project they are undertaking will last 4 years and the asset will be sold at that time for $5m.

Calculate the after-tax salvage CF in Year 4? Assume a 25% tax rate. Show all Workings.