Question: Your firm needs a computerized machine tool lathe which costs $45,000 and requires $5,500 in maintenance expense for each year of its 3-year life. After
Your firm needs a computerized machine tool lathe which costs $45,000 and requires $5,500 in maintenance expense for each year of its 3-year life. After three years, this machine will be replaced. The machine falls into the MACRS 3-year class life category. Assume a tax rate of 25 percent and a discount rate of 12 percent. If the lathe can be sold for $6,300 at the end of year 3, what is the after-tax salvage value? The MACRS rates are 33.33% for year 1; 44.45% for year 2; 14.81% for year 3; and 7.41% for year 4
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
