Your firm needs a computerized machine tool lathe which costs $59,000 and requires $12,900 in maintenance for each year of its 3-year life. After three years, this machine will be replaced. The machine falls into the MACRS 3-year class life category, and neither bonus depreciation nor Section 179 expensing can be used. Assume a tax rate of 21 percent and a discount rate of 12 percent. If the lathe can be sold for $5,900 at the end of year 3, what is the after-tax salvage value? (Round your answer to 2 decimal places.)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Your firm needs a computerized machine tool lathe which costs $59,000 and
requires $12,900 in maintenance for each year of its 3-year life. After three
years, this machine will be replaced. The machine falls into the MACRS 3-year
class life category, and neither bonus depreciation nor Section 179 expensing
can be used. Assume a tax rate of 21 percent and a discount rate of 12
percent.
If the lathe can be sold for $5,900 at the end of year 3, what is the after-tax
salvage value? (Round your answer to 2 decimal places.)
Salvage value after tax $
5,380.45X
4
Transcribed Image Text:3 Your firm needs a computerized machine tool lathe which costs $59,000 and requires $12,900 in maintenance for each year of its 3-year life. After three years, this machine will be replaced. The machine falls into the MACRS 3-year class life category, and neither bonus depreciation nor Section 179 expensing can be used. Assume a tax rate of 21 percent and a discount rate of 12 percent. If the lathe can be sold for $5,900 at the end of year 3, what is the after-tax salvage value? (Round your answer to 2 decimal places.) Salvage value after tax $ 5,380.45X 4
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