Question: Your firm needs a computerized machine tool lathe which costs $96,337 and requires $12,810 in maintenance expense for each year of its 5-year life. After

 Your firm needs a computerized machine tool lathe which costs $96,337

Your firm needs a computerized machine tool lathe which costs $96,337 and requires $12,810 in maintenance expense for each year of its 5-year life. After five years, this machine will be replaced. The machine falls into the MACRS e 5-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 $6,043 at the end of year 5, what is the after-tax salvage value? Below are the MACRS rates for the 5-year recovery period. DO NOT USE DOLLAR SIGNS OR COMMAS IN YOUR ANSWER. ENTER YOUR ANSWER TO THE NEAREST DOLLAR (e.g. 1250). Year MACRS Rate 20.00% 1 2 32.00% 19.20% 3 4 11.52% 5 11.52% 5.76% 6

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!