Question
You are evaluating a potential investment in equipment. The equipment's basic price is $184,000, and shipping costs will be $3,700. It will cost another $23,900
You are evaluating a potential investment in equipment. The equipment's basic price is $184,000, and shipping costs will be $3,700. It will cost another $23,900 to modify it for special use by your firm, and an additional $12,900 to install it. The equipment falls in the MACRS 3-year class that allows depreciation of 33% the first year, 45% the second year, 15% the third year, and 7% the fourth year. You expect to sell the equipment for 29,200 at the end of three years. The equipment is expected to generate revenues of $168,000 per year with annual operating costs of $82,000. The firm's marginal tax rate is 45.0%. What is the value of the after-tax cash flow associated with the sale of the equipment?
Question 1 options:
| $9,647 |
| $16,060 |
| $23,132 |
| $13,485 |
| $7,417 |
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