Question

Your firm needs a machine which costs $150,000, and requires $30,000 in maintenance for each year of its 7 year life. After 3 years, this machine will be replaced. The machine falls into the MACRS 7-year class life category. Assume a tax rate of 40% and a discount rate of 14%. If this machine can be sold for $15,000 at the end of year 7, what is the after tax salvage value?

Name: your firm needs a machine which costs 150000 and requires 30000 in maintenance for each year of its 7 year life after 3 years this machine will be replaced the machine falls into the macrs 7 48415
Uploaded: 2023-11-22T06:15:11-08:00
Duration: 2 min 5 s
Channel: Akash M
Description: your firm needs a machine which costs 150000 and requires 30000 in maintenance for each year of its 7 year life after 3 years this machine will be replaced the machine falls into the macrs 7 48415

          Your firm needs a machine which costs $150,000, and requires $30,000 in maintenance for each year of its 7 year life. After 3 years, this machine will be replaced. The machine falls into the MACRS 7-year class life category. Assume a tax rate of 40% and a discount rate of 14%. If this machine can be sold for $15,000 at the end of year 7, what is the after tax salvage value?

Added by Sherry G.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

Instant Answer

Solved by Expert Akash M

11/22/2023

Step 1

Year 1: 14.29% x $150,000 = $21,435 Year 2: 24.49% x $150,000 = $36,735 Year 3: 17.49% x $150,000 = $26,235 Year 4: 12.49% x $150,000 = $18,735 Year 5: 8.93% x $150,000 = $13,395 Year 6: 8.92% x $150,000 = $13,380 Year 7: 8.93% x $150,000 = $13,395 Show more…

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Your firm needs a machine which costs $150,000, and requires $30,000 in maintenance for each year of its 7 year life. After 3 years, this machine will be replaced. The machine falls into the MACRS 7-year class life category. Assume a tax rate of 40% and a discount rate of 14%. If this machine can be sold for $15,000 at the end of year 7, what is the after tax salvage value?