You purchase a machine for $100 in year 0 and plan to terminate your project and sell

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You purchase a machine for $100 in year 0 and plan to terminate your project and sell off the machine for $30 in year 5. The depreciated book value of the machine in year 5 is $0. The corporate tax rate is 35%. The cost of capital is r=5%.

What is the present value (NPV) of the salvage value (after paying taxes) of the machine?

Related Book For answer-question

Contemporary Financial Management

ISBN: 9780324289114

10th Edition

Authors: James R Mcguigan, R Charles Moyer, William J Kretlow

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Posted Date: Mar 21, 2023 03:51 AM

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You purchase a machine for $100 in year 0 and plan to terminate your project and sell

Question:

Expert Answer:

To calculate the present value of the salvage value we need to determine the aftertax salvage value ... View the full answer

Contemporary Financial Management

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