Your Firm Needs a Machine Which Costs $125,000, and Requires

question 70

Multiple Choice

Your firm needs a machine which costs $125,000, and requires $5,000 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 35 percent and a discount rate of 10 percent. If this machine can be sold for $15,000 at the end of year 3, what is the after-tax salvage value?

• A)$9,262.50
• B)$9,750.00
• C)$11,692.69
• D)$12,991.88

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