what's the after-tax salvage value of the equipment, in millions of dollars?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 9P
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Company QuickGro just sold an old piece of equipment for $50.97 million dollars .

The company spent $95.21 millions buying the equipment 5 years ago and used a 7-year straight-line method depreciating the equipment during the past 5 years.

Suppose that the company has a 40% marginal tax rate, what's the after-tax salvage value of the equipment, in millions of dollars?

Keep two decimal points.

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Step 1

Value of Equipment after-tax is the net of sale value and cost excluding tax charges on any gain. 

Salvage value is the value of the equipment at the end of its useful life or cost before disposing of the machine.

 

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