Penny's is considering a five-year project that will require $738,000 for new fixed assets that will be depreciated straight-line to a zero book value over five years. At the end of the project, the fixed assets can be sold for 20 percent of their original cost. The project is expected to generate annual sales of $679,000 with costs of $321,000. The tax rate is 22 percent and the required rate of return is 15.2 percent. 

What is the amount of the aftertax salvage value?

 

Answer rating: 100% (QA)

To calculate the aftertax salvage value we need to first calculate th... View the full answer