Aftertax salvage value for use in capital budgeting analysis

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Reference no: EM13874872

Kasper Film Co. is selling off some old equipment it no longer needs because its associated project has come to an end. The equipment originally cost $22,500, of which 80% has been depreciated. The firm can sell the used equipment today for $7,500, and its tax rate is 35%. What is the equipment's after-tax salvage value for use in a capital budgeting analysis? Note that if the equipment's final market value is less than its book value, the firm will receive a tax credit as a result of the sale.

$5,558

$5,850

$6,143

$6,450

$6,772

Reference no: EM13874872

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