Question: Your firm needs a computerized machine tool lathe which costs $47,000 and requires $11,700 in maintenance for each year of its 3 year life. After

Your firm needs a computerized machine tool lathe which costs $47,000 and requires $11,700 in maintenance 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, and neither bonus depreciation nor Section 179 expensing can be used. Assume a tax rate of 21 percent and a discount rate of 11 percent. If the lathe can be sold for $4,700 at the end of year 3, what is the after-tax salvage value? Note: Round your answer to 2 decimal places. Salvago value after tax

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Your firm needs a computerized machine tool lathe which costs $40, 000 and requires $11, 000 in maintenance for each year of its 3-year life. After three years, this machine will be replaced. The...

Your firm needs a computerized machine tool lathe which costs $60, 000 and requires $13, 000 in maintenance for each year of its 3-year life. After three years, this machine will be replaced. The...

1. You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $60,000. The truck falls into the MACRS 3-year class, and it will be...

1.Suppose you sell a fixed asset for $116,000 when its book value is $136,000. If your companys marginal tax rate is 35 percent, what will be the effect on cash flows of this sale (i.e., what will be...

KADS, Inc. has spent $400,000 on research to develop a new computer game. The firm is planning to spend $200,000 on a machine to produce the new game. Shipping and installation costs of the machine...

Depreciation and After-tax Cash Flow from Sale of Assets 2 Note to students: I have entered the value you should use as depreciable cost in cell B26. 3 Please see practice problems 12-13 and 12-14...

Problem 12-8 After-Tax Cash Flow from Sale of Assets (LG12-4) Your firm needs a computerized machine tool lathe which costs $59,000 and requires $12,900 in maintenance for each year of its year life....

Your firm needs a computerized machine tool lathe which costs $55,000 and requires $12,500 in maintenance for each year of its 3-year life. After three years, this machine will be replaced. The...

Problem 1 2 - 8 After - Tax Cash Flow from Sale of Assets ( LG 1 2 - 4 ) Your firm needs a computerized machine tool lathe which costs $ 5 5 , 0 0 0 and requires $ 1 2 , 5 0 0 in maintenance for each...

Your firm needs a computerized machine tool lathe which costs $45,000 and requires $11,500 in maintenance for each year of its 3- year life. After three years, this machine will be replaced. The...

Though air is a very good insulator, it breaks down if the electric field intensity exceeds the critical value Eer= 3x10 N/C. What is the maximum charge which can be placed on a metal ball of radius...

Wesley Hospital installs a new parking lot. The paving cost $40,000 and the lights to illuminate the new parking area cost $25,000. Which of the following statements is true with respect to these...

3. If Apples common stock has 20% of rate of return, a Treasury Bills rate of return of 7%, and Beta of 1.25. Calculate a market rate of return

Within a continuously competitive global business environment, publicly held companies face constant pressure to generate and report positive financial results. Unfortunately, some leaders may be...

The generation of charts, grids, hierarchies, matrices and so on are all forms of: a Template analysis. b Data display. c Grounded theory. d Analytical induction.

What sample selection process is most appropriate for your project? How confident are you (and your tutor or supervisor) that your sample will be sufficient to provide data of good quality?

How confident are you of your skills as an in-depth research interviewer, or facilitator of focus groups? How might you further develop your skills in these areas?