McPherson Company Must Purchase a New Milling Machine $\begin{array}{cc}{\text { Year }} & \text { Depreciation Rate } \\1 & 0.20 \\2 & 0.32 \\3 & 0.19 \\4 & 0.12 \\5 & 0.11 \\6 &0.06\end{array}$

question 43

Multiple Choice

McPherson Company must purchase a new milling machine.The purchase price is $50,000,including installation.The 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? $\begin{array}{cc}{\text { Year }} & \text { Depreciation Rate } \\1 & 0.20 \\2 & 0.32 \\3 & 0.19 \\4 & 0.12 \\5 & 0.11 \\6 &0.06\end{array}$

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

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