Tippit the Strong Company is looking at a new sausage system with an installed cost of $300,000 This asset will be depreciated according to MACRS 5 years over the project's three year life, at the end of which the sausage system can be sold for $90,000 The sausage system will create annual savings of $200,000 (before taxes and depreciation), and the system requires an initial investment in net working capital of $40,000 The tax rate is 30 percent Modified ACRS Depreciation Allowances Property Class 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 09 8 4 46 What is the (after tax) salvage value at the end of Year 3

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Tippit the Strong Company is looking at a new sausage system with an installed cost of $300,000  This asset will be depreciated according to MACRS 5 years over the project's three year life, at the end of which the sausage system can be sold for $90,000  The sausage system will create annual savings of $200,000 (before taxes and depreciation), and the system requires an initial investment in net working capital of $40,000  The tax rate is 30 percent  Modified ACRS Depreciation Allowances Property Class 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 09 8 4 46 What is the (after tax) salvage value at the end of Year 3

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Tippit-the-Strong Company is looking at a new sausage system with an installed cost of $300,000. This asset will be depreciated according to MACRS 5 years

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