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Business, 09.05.2020 04:57 jhick285

The after-tax salvage value for this project is (Use the following information):
A proposed power-saving equipment has a purchase price of $580,000. The equipment will be used in a four-year project but is classified as five-year MACRS property for tax purposes. The equipment is expected to save $280,000 before taxes per year in energy costs, and it will have a salvage value of $60,000 at the end of the project. To decide on the feasibility of the investment, the managers have ordered a series of tests to determine whether the proposed equipment will realize the required costs savings or not for a total cost of $18,000. The required rate of return on the equipment is 14% and it is expected to increase working capital by $45,000 at the beginning of the project. The tax rate is 35 percent and the MACRS depreciation schedule is as follows:
Year 1 2 3 4 5 6
MACRS 20.00% 32.00% 19.20% 11.52% 11.52% 5.76%
1) $39,000.00
2) $60,000.00
3) $64,072.58
4) $74,078.40

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The after-tax salvage value for this project is (Use the following information):
A proposed p...
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