Determine what is the after-tax salvage value

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Reference no: EM13329061

Your firm needs a computerized machine tool lathe which costs $48,000 and requires $11,800 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. Assume a tax rate of 35 percent and a discount rate of 12 percent.

If the lathe can be sold for $4,800 at the end of year 3, what is the after-tax salvage value?

Reference no: EM13329061

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