How much is the after-tax salvage value cash flow

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Question - Madison Manufacturing is considering a new machine that costs $1,360,000.0 and would reduce pre-tax manufacturing costs by $340,000.0 annually. Madison would use the 3-year MACRS method to depreciate the machine, and management thinks the machine would have a value of $163,200.0 at the end of its 5-year operating life. The applicable depreciation rates are 33.33%, 44.45%, 14.81%, and 7.42%. Working capital would increase by $204,000.0 initially, but it would be recovered at the end of the project's 5-year life. Madison's marginal tax rate is 45.00%, and a 18.00% WACC is appropriate for the project. How much is the after-tax salvage value cash flow?

Reference no: EM132788206

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