Your Firm Needs a Computerized Machine Tool Lathe That Costs

question 50

Multiple Choice

Your firm needs a computerized machine tool lathe that costs $50,000 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 $6,000 at the end of year 3, what is the after-tax salvage value?

• A) $3,705.00
• B) $4,344.50
• C) $5,499.50
• D) $5,518.05