McPherson Company Must Purchase a New Milling MachineThe Purchase Price

question 32

Multiple Choice

McPherson Company must purchase a new milling machineThe purchase price is $50,000, including installationThe 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?

• A) $ 8,878
• B) $ 9,345
• C) $ 9,837
• D) $10,355
• E) $10,900

---

Definitions:

Null Hypothesis

A default hypothesis that there is no significant difference or effect, often tested against an alternative hypothesis in statistical analysis.

Two-Tail Test

A statistical test that considers both directions of a distribution to determine if there is a significant difference from the hypothesized value, useful for checking inequalities.

Null Hypothesis

A default hypothesis that there is no difference or effect, often tested to determine the likelihood of observing the sample data.

Two-Tail Test

A statistical test that considers both the upper and lower tails of the distribution to test for extreme values in both directions from the mean.