McPherson Company Must Purchase a New Milling Machine A)$8,878
B)$9,345
C)$9,837
D)$10,355
E)$10,900

question 14

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? $$\begin{array} { c c } \text { Year } & \text { Depreciation Rate } \\\hline 1 & 0.20 \\2 & 0.32 \\3 & 0.19 \\4 & 0.12 \\5 & 0.11 \\6 & 0.06\end{array}$$

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

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