A company is considering the purchase of a new machine for $50,000, installed. The machine has a tax life of 5 years, and it can be depreciated according to the depreciation rates below. The firm expects to operate the machine for 4 years and then to sell it for $5,000. If the marginal tax rate is 40%, what will the after-tax salvage value be when the machine is sold at the end of Year 4?   Year Depreciation Rate  1 0.20  2 0.32  3 0.19  4 0.12  5 0.11  6 0.06 ​ Group of answer choices $6,464 $6,720 $7,232 $5,504 $6,400

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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A company is considering the purchase of a new machine for $50,000, installed. The machine has a tax life of 5 years, and it can be depreciated according to the depreciation rates below. The firm expects to operate the machine for 4 years and then to sell it for $5,000. If the marginal tax rate is 40%, what will the after-tax salvage value be when the machine is sold at the end of Year 4?
 

Year

Depreciation Rate

 1

0.20

 2

0.32

 3

0.19

 4

0.12

 5

0.11

 6

0.06

Group of answer choices
$6,464
$6,720
$7,232
$5,504
$6,400
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Section 179 Deduction and Modified Accelerated Cost Recovery System (MACRS) Depreciation
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