n asset used in a four-year project falls in the five-year MACRS class for tax purposes. he asset has an acquisition cost of $6,110,000 and will be sold for $1,310,000 at the end the project. If the tax rate is 21 percent, what is the aftertax salvage value of the asset? efer to Table 8.3. (Do not round intermediate calculations and enter your answer in ollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.) Aftertax salvage value

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Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.