Suppose that ABC Company purchased $10000 of machinery 3 years ago. The machinery is 5-year MACRS property.
Fantastic news! We've Found the answer you've been seeking!
Question:
- Suppose that ABC Company purchased $10000 of machinery 3 years ago. The machinery is 5-year MACRS property. The firm is selling this equipment today for $5000. What is the After-tax Salvage Value if the tax rate is 30%?
Comment: This follows a pattern: Selling Price of the depreciated asset - the remaining book value to get the gain or loss. Calculate the tax, then subtract the tax from the selling price to get the after-tax salvage value.
- Suppose that ABC Company purchased $10000 of machinery 4 years ago. The machinery is 5-year MACRS property. The firm is selling this equipment today for $5000. What is the After-tax Salvage Value if the tax rate is 30%?
- Suppose that ABC Company purchased $10000 of machinery 5 years ago. The machinery is 5-year MACRS property. The firm is selling this equipment today for $5000. What is the After-tax Salvage Value if the tax rate is 30%?
The MACRS allowance percentages are as follows, commencing with year one: 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, 5.76%.
Show work step-by-step using excel
Related Book For
Corporate Finance Core Principles and Applications
ISBN: 978-0077905200
3rd edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford
Posted Date: