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The Rumpel Felt Company purchased a felt press last year at a cost of $7,500. The machine had an expected life of 3 years at the time of purchase. The division manager reports that, for $12,000 (including installation), a new felt press can be bought. Both machines are 5-year property with depreciation rates of 20%, 32%, and 19.2% in the first three years. The new felt press will expand sales because the new fashion is for smoother felt. The old machine's current market value is $1,000. Taxes are 40%. What is the net salvage value of the old press if Rumpel replaces it today? (Round your answer to the nearest dollar.)

The Rumpel Felt Company purchased a felt press last year at a cost of $7,500. The machine had an expected life of 3 years at the time of purchase. The division manager reports that, for $12,000 (including installation), a new felt press can be bought. Both machines are 5-year property with depreciation rates of 20%, 32%, and 19.2% in the first three years. The new felt press will expand sales because the new fashion is for smoother felt. The old machine's current market value is $1,000. Taxes are 40%. What is the net salvage value of the old press if Rumpel replaces it today? (Round your answer to the nearest dollar.)

Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter12: Capital Budgeting: Decision Criteria
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The Rumpel Felt Company purchased a felt press last year at a cost of $7,500. The machine had an expected life of 3 years at the time of purchase. The division manager reports that, for $12,000 (including installation), a new felt press can be bought. Both machines are 5-year property with depreciation rates of 20%, 32%, and 19.2% in the first three years. The new felt press will expand sales because the new fashion is for smoother felt. The old machine's current market value is $1,000. Taxes are 40%.

What is the net salvage value of the old press if Rumpel replaces it today? (Round your answer to the nearest dollar.)

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