Question

A company has collected the following information about a new machine that it is evaluating for possible investment:
Purchase price .................... $340,000
Salvage value at the end of three years ........... $ 15,000
Shipping and installation ............... $ 50,000
Book value at the end of three years ............ $ 5,000
Marginal tax rate ................... 40%
a. What is the machine’s depreciable basis—that is, the amount that can be depreciated during its life?
b. In three years, what will be the net cash flow generated by the disposal of the machine?



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  • CreatedNovember 24, 2014
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