Question
Your firm needs a computerized machine tool lathe which costs $84,867 and requires $12,487 in maintenance expense for each year of its 5-year life. After
Your firm needs a computerized machine tool lathe which costs $84,867 and requires $12,487 in maintenance expense for each year of its 5-year life. After five years, this machine will be replaced. The machine falls into the MACRS (Links to an external site.) 5-year class life category. Assume a tax rate of 25 percent and a discount rate of 12 percent. If the lathe can be sold for $10,164 at the end of year 5, what is the after-tax salvage value? Below are the MACRS rates for the 5-year recovery period. Year 1: 20% Year 2: 32% Year 3: 19.2% Year 4: 11.52% Year 5: 11.52% Year 6: 5.76.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started