Question
You are calculating the SV at Time 10 for a replacement project. The new machine will be depreciated using MACRS for a 5-year asset class,
You are calculating the SV at Time 10 for a replacement project. The new machine will be depreciated using MACRS for a 5-year asset class, and its expected salvage value at Time 10 is $8,000. The old machine is being depreciated on a straight-line basis to an expected salvage value at Time 10 of $2,000. Net working capital investments totaling $1,000 were made over the life of the project. Additional tax-deductible shutdown expenses of $500 are necessary at Time 10. If the tax rate is 30%, what is the value of SV at Time 10?
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