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Your firm is contemplating the purchase of a new computer-based order entry system for $425,000. The system will be depreciated straight-line to a book value
Your firm is contemplating the purchase of a new computer-based order entry system for $425,000. The system will be depreciated straight-line to a book value of $75,000 over its five-year life. It can be sold at $90,000 at the end of that time. The marginal tax rate is 34%.
[1] What is the depreciation expense per year?
[2] What is the after-tax salvage value of this order entry system? A.[1] is $70,000; [2] is $90,000
B.[1] is $70,000; [2] is $84,900
C.[1] is $70,000; [2] is $75,000
D.[1] is $85,000; [2] is $84,900
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