Answered step by step
Verified Expert Solution
Question
1 Approved Answer
What level of pre-tax cost savings do we require for this project to be profitable? A proposed cost-saving device has an installed cost of $655,000.
What level of pre-tax cost savings do we require for this project to be profitable?
A proposed cost-saving device has an installed cost of $655,000. The device will be used in a five-year project but is classified as three-year MACRS property for tax purposes. The required initial net working capital investment is $65,000, the marginal tax rate is 22 percent, and the project discount rate is 11 percent. The device has an estimated Year 5 salvage value of $56,000. What level of pretax cost savings do we require for this project to be profitable? MACRS schedule (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Pretax cost savings Year Seven-Year 1 14.29% 24.49 2. Property Class Three-Year Five-Year 33.33% 20.00% 44.45 32.00 14.81 19.20 7.41 11.52 11.52 3 4 5 17.49 12.49 8.93 8.92 8.93 4.46 6. 5.76 7 8Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored 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