Your facility is undergoing a major expansion, which will require significant capital investment into new machinery. The total cost of the machinery will be $7.2 Million, and they will be purchased outright immediately. This machinery is considered a 7-year MACRS asset. However, you expect to use it for only six years before selling it for $1.5 Million. What is the unrecovered MACRS depreciation (i.e. remaining book value) of this machinery at the time of sale at the end of year 6? a. $5,914,800 b. $964,080 c. $1,017,450 d. $1,285,200
Your facility is undergoing a major expansion, which will require significant capital investment into new machinery. The total cost of the machinery will be $7.2 Million, and they will be purchased outright immediately. This machinery is considered a 7-year MACRS asset. However, you expect to use it for only six years before selling it for $1.5 Million. What is the unrecovered MACRS depreciation (i.e. remaining book value) of this machinery at the time of sale at the end of year 6? a. $5,914,800 b. $964,080 c. $1,017,450 d. $1,285,200
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
Section: Chapter Questions
Problem 1PS
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Question
Your facility is undergoing a major expansion, which will require significant capital
investment into new machinery. The total cost of the machinery will be $7.2 Million, and they
will be purchased outright immediately. This machinery is considered a 7-year MACRS
asset. However, you expect to use it for only six years before selling it for $1.5 Million.
What is the unrecovered MACRS
at the time of sale at the end of year 6?
a. $5,914,800
b. $964,080
c. $1,017,450
d. $1,285,200
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