Question
You are evaluating a potential investment in equipment. The equipment's basic price is $191,000, and shipping costs will be $7,600. It will cost another $19,100
You are evaluating a potential investment in equipment. The equipment's basic price is $191,000, and shipping costs will be $7,600. It will cost another $19,100 to modify it for special use by your firm, and an additional $9,600 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 34,100 at the end of three years. The equipment is expected to generate revenues of $179,000 per year with annual operating costs of $84,000. The firm's marginal tax rate is 20.0%. What is the value of the after-tax cash flow associated with the sale of the equipment?
$12,273
$27,280
$18,189
$14,551
$30,462
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