A company is evaluating a new 4-year project. The equipment necessary for the project will cost $3,450,000 and can be sold for $710,000 at the end of the project. The asset is in the 5-year MACRS class. The depreciation percentage each year is 20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, and 11.52 percent, respectively. The company's tax rate is 21 percent. What is the aftertax salvage value of the equipment?
A company is evaluating a new 4-year project. The equipment necessary for the project will cost $3,450,000 and can be sold for $710,000 at the end of the project. The asset is in the 5-year MACRS class. The depreciation percentage each year is 20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, and 11.52 percent, respectively. The company's tax rate is 21 percent. What is the aftertax salvage value of the equipment?
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
Section: Chapter Questions
Problem 17E: Postman Company is considering two independent projects. One project involves a new product line,...
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![A company is evaluating a new 4-year project. The equipment necessary for the
project will cost $3,450,000 and can be sold for $710,000 at the end of the project.
The asset is in the 5-year MACRS class. The depreciation percentage each year is
20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, and 11.52 percent,
respectively. The company's tax rate is 21 percent. What is the aftertax salvage value
of the equipment?
$710,000
$755,536
$505,488
$686,094
$426,000
9](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdebd78ac-20a7-48e4-adc7-e464666aa961%2F88d7393c-9ce5-42fe-8f53-f3d4672b087b%2F5y082lp_processed.jpeg&w=3840&q=75)
Transcribed Image Text:A company is evaluating a new 4-year project. The equipment necessary for the
project will cost $3,450,000 and can be sold for $710,000 at the end of the project.
The asset is in the 5-year MACRS class. The depreciation percentage each year is
20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, and 11.52 percent,
respectively. The company's tax rate is 21 percent. What is the aftertax salvage value
of the equipment?
$710,000
$755,536
$505,488
$686,094
$426,000
9
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