Question
Your firm needs a computerized machine tool lathe which costs $58,000 and requires $7,500 in maintenance expense for each year of its 3-year life. After
Your firm needs a computerized machine tool lathe which costs $58,000 and requires $7,500 in maintenance expense 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. Assume a tax rate of 25 percent and a discount rate of 12 percent. If the lathe can be sold for $4,800 at the end of year 3, what is the after-tax salvage value? The MACRS rates are 33.33% for year 1; 44.45% for year 2; 14.81% for year 3; and 7.41% for year 4. Question 35 options: A) $4,674 B) $4,813 C) None of these are correct. D) $5,387 E) $4,183
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