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Level of pretax cost savings

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A proposed cost-saving device has an installed cost of $720,000. The device will be used in a five-year project but is classified as three-year MACRS property for tax purposes. The required initial net working capital investment is $130,000, the marginal tax rate is 25 percent, and the project discount rate is 12 percent. The device has an estimated Year 5 salvage value of $95,000. What level of pretax cost savings do we require for this project to be profitable? MACRS schedule. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Reference no: EM132613614

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