Your firm needs a machine which costs $140,000, and requires $29,000 in maintenance for each year of its 3 year life. After 3 years, this machine will be replaced. The machine falls into the MACRS 3-year class life category. Assume a tax rate of 21% and a discount rate of 12%. If this machine can be sold for $14,000 at the end of year 3, what is the after tax salvage value? Multiple Choice О $13,238.54 ☐ $8,195 О $3,626.00 О $11,060.00

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
Section: Chapter Questions
Problem 17P: The Perez Company has the opportunity to invest in one of two mutually exclusive machines that will...
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Your firm needs a machine which costs $140,000, and requires $29,000 in maintenance for each year of its 3 year life. After 3 years, this machine
will be replaced. The machine falls into the MACRS 3-year class life category. Assume a tax rate of 21% and a discount rate of 12%. If this machine
can be sold for $14,000 at the end of year 3, what is the after tax salvage value?
Multiple Choice
О
$13,238.54
☐ $8,195
О
$3,626.00
О
$11,060.00
Transcribed Image Text:Your firm needs a machine which costs $140,000, and requires $29,000 in maintenance for each year of its 3 year life. After 3 years, this machine will be replaced. The machine falls into the MACRS 3-year class life category. Assume a tax rate of 21% and a discount rate of 12%. If this machine can be sold for $14,000 at the end of year 3, what is the after tax salvage value? Multiple Choice О $13,238.54 ☐ $8,195 О $3,626.00 О $11,060.00
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