Find the resale value of the equipment

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Reference no: EM13907136

Naperville Corporation plans to buy a piece of construction equipment for $225,000 and depreciate it fully over 5 years using straight-line method of depreciation. However, it plans to use it for 8 years and then sell it for an unknown amount. The equipment will save $45,000 annually, before taxes. The discount rate in this case is 11% and the income tax rate 32%. Find the resale value of the equipment after 8 years just to break even.

Reference no: EM13907136

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