Your Firm Needs a Machine Which Costs $60,000, and Requires

question 56

Multiple Choice

Your firm needs a machine which costs $60,000, and requires $15,000 in maintenance for each year of its 5-year life. After 5 years, this machine will be replaced. The machine falls into the MACRS 5-year class life category. Assume a tax rate of 35% and a discount rate of 10%. If this machine can be sold for $8,000 at the end of year 5, what is the after-tax salvage value?

• A) $3,456.00
• B) $4,544.00
• C) $5,200.00
• D) $6,409.60

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Definitions:

Income

Income is the money that an individual or business receives in exchange for providing labor, producing goods, or investing capital.

Price

Price is the amount of money expected, required, or given in payment for something, often determined by the forces of supply and demand in the market.

Apples

A type of fruit that is typically round, with red, green, or yellow skin, and sweet to tangy flesh.

Bananas

An edible, lengthy fruit generated by several species of substantial, flowering herb plants in the Musa genus.