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Your firm needs a computerized machine tool lathe which costs $ 5 5 , 0 0 0 and requires $ 1 2 , 5 0

Your firm needs a computerized machine tool lathe which costs $55,000 and requires $12,500 in maintenance for each year of its 3-year life. After three years, this machine will be replaced. The machine falls into the MACRS 3-year class life category, and neither bonus depreciation nor Section 179 expensing can be used. Assume a tax rate of 21 percent and a discount rate of 13 percent.
If the lathe can be sold for $5,500 at the end of year 3, what is the after-tax salvage value?

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