Your Firm Needs a Computerized Machine Tool Lathe That Costs

question 110

Multiple Choice

Your firm needs a computerized machine tool lathe that costs $50,000, requires $10,000 in installation, $5,000 in freight charges, and another $12,000 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 30 percent and a discount rate of 12 percent. If the lathe can be sold for $7,000 at the end of year 3, what is the after-tax salvage value?

• A)$6,499.35
• B)$6,344.95
• C)$5,999.45
• D)$6,554.95

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Definitions:

Minimum Wage

The lowest legal wage that can be paid to most workers.

Unemployed Workers

Unemployed workers are individuals who are actively looking for employment but are not currently employed.

Government Imposes

Actions taken by a government to enforce regulations, taxes, or penalties on its citizens or businesses within its jurisdiction.

Structurally Unemployed

Individuals who are unemployed due to changes in the industry they worked in or mismatches between their skills and what employers need.