Project needs equipment-after-tax salvage

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A 5-year project needs an equipment at a cost of $60,000. The applicable tax rate is 30% and the 3-year MACRS is used. What is the after-tax salvage if the equipment can be sold at $20,000 at the end of the project. A$20,000 B$14,000 C$15,333

City Security is considering a project with an initial fixed asset cost of $3.5 million which will be depreciated on the MACRS 3-year class over the 2-year of the project. At the end of the project, the equipment will be sold for an estimated $800,000. The project will increase sales 1.5 millions and reduce operating costs by 0.5 million a year. The tax rate is 35%. Initial investment of NWC at$100,000 is needed. Should this project be impletemented if the firm requires a 16% rate of return?

Reference no: EM132045919

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