What is the present value and will it affect companys taxes

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Reference no: EM13239622

The company you work for has a high speed 5-axis milling machine which was purchased 5 years ago for $200,000 and has a 10 year life. This machine is currently idle and can be used to make a product designed by a research institute which requires at $10,000 license fee to use their design. Tooling costs $5000. Materials and consumables (cutting fluids, milling cutters, power, etc) are budgeted at $40 per product. Your company applies an overhead rate of 25% on all direct costs to cover indirect costs.

The market has changed since your company bought the machine; it now seems possible that it could be sold for as much as $20,000 5 years from now; what is the present value (i=4%)? Will this affect the company's taxes?

Reference no: EM13239622

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