Titiwangsa corporation is using a computer where its original cost was $25,000. The machine is now 5
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Question:
Titiwangsa corporation is using a computer where its original cost was $25,000. The machine is now 5 years old and has a current market value of $5,000. The computer is being depreciated over a 10 year life toward zero salvage value. Depreciation is on a straight line basic. Management is contenplating to purchase a new computer which will cost $50,000 and the estimated salvage value is $1,000. Expected savings from the new comouter is $3,000 a year. Depreciation is on a straight line basic over a seven year life and the cost of capital if 10%. If the tax rare is 50%, should the firm replace the asset?
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