6.10        Calculating Salvage Value An asset used in a 4-year project falls in the 5-year MACRS class for tax purposes. The asset has an acquisition cost of $7.6 million and will be sold for $1.4 million at the end of the project. If the tax rate is 21 percent, what is the after

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6.10        Calculating Salvage Value An asset used in a 4-year project falls in the 5-year MACRS class for tax purposes. The asset has an acquisition cost of $7.6 million and will be sold for $1.4 million at the end of the project. If the tax rate is 21 percent, what is the after tax salvage value of the asset?

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Step 1

MACRS 5  year class 

1 year 20%

2 year 32%

3 year 19.20%

4 year 11.52%

5 year 11.52%

6 year 5.76%

 

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