Your Firm Needs a Computerized Machine Tool Lathe That Costs

question 61

Multiple Choice

Your firm needs a computerized machine tool lathe that costs $50,000, requires $10,000 in installation, $5,000 in freight charges, and another $12,000 in maintenance for each year of its three-year life. After three years, this machine will be replaced. The machine falls into the MACRS three-year class life category. Assume a tax rate of 21 percent and a discount rate of 12 percent. If the lathe can be sold for $7,000 at the end of year 3, what is the after-tax salvage value?

• A) $6,499.35
• B) $6,541.47
• C) $5,999.45
• D) $4,816.50

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Fraud

A deliberate deception intended to secure an unfair or unlawful gain.

ABC Company

A placeholder name often used to represent a hypothetical or generic business entity.

American Express

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Consumer Credit Contract

A legal agreement between a borrower and a lender in which the borrower receives something of value now and agrees to repay the lender at a future date, usually with interest, under specified conditions.