JC Company must purchase a new milling machine. The purchase price is $10,000, including installation. The machine

Fantastic news! We've Found the answer you've been seeking!

Question:

JC Company must purchase a new milling machine. The purchase price is $10,000, including installation. The machine has a tax life of 3 years, and it can be depreciated according to the following rates. The firm expects to operate the machine for 2 years and then to sell it for $4,500. If the marginal tax rate is 20%, what will the after-tax salvage value be when the machine is sold at the end of Year 2? Year Depreciation Rate

1= 0.25

2= 0.40

3= 0.20

4= 0.15