Find the resale value of the equipment

Reference no: EM13260884

Corporation plans to buy a piece of construction equipment for $100,000 and depreciate it fully over 4 years using straight-line method of depreciation. However, it plans to use it for 6 years and then sell it for an unknown amount. The equipment will save $35,000 annually, before taxes. The discount rate in this case is 10% and the income tax rate 30%. Find the resale value of the equipment after six years just to break even.

Reference no: EM13260884

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