What is the after tax salvage value in year three

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Problem: Summer Tyme, Inc., is considering a new 3-year expansion project that requires an initial fixed asset investment of $852,423. The fixed asset will be depreciated straight- line to 53,673 over its 3-year tax life, after which time it will have a market value of $137,518. The project requires an initial investment in net working capital of $78,631. The project is estimated to generate $217,968 in annual sales, with costs of $119,634. The tax rate is 0.25 and the required return on the project is 0.15. What is the after tax salvage value in year 3?

Reference no: EM133616856

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