Proposed cost-saving device has an installed cost

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A proposed cost-saving device has an installed cost of $760,000. 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 $58,000, the marginal tax rate is 35 percent, and the project discount rate is 9 percent. The device has an estimated Year 5 salvage value of $83,000. What level of pretax cost savings do we require for this project to be profitable?

Reference no: EM13927721

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