The firm expects to operate the machine for 4 years and

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Marshall-Miller & Company is considering the purchase of a new machine for $50,000, installed. The machine has a tax life of 5 years, and it can be depreciated according to the following rates. The firm expects to operate the machine for 4 years and then to sell it for $12,500. If the marginal tax rate is 40%, what will the after-tax salvage value be when the machine is sold at the end of Year 4?

Year

Depreciation Rate

1

0.20

2

0.32

3

0.19

4

0.12

5

0.11

6

0.06

Reference no: EM13485761

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