Answered step by step
Verified Expert Solution
Question
00
1 Approved Answer
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
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 8.92 7 8.93 8 4.46 What is the lafter 5.76 tax) salvage value at the end of Year 3? $78.274 $88.920 $80,640 586.400 none of the above
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started