A Four-Year-Old Asset Is to Be Replaced as Part of a Capital

question 151

Multiple Choice

A four-year-old asset is to be replaced as part of a capital project. It originally cost $20,000 and has a depreciation (straight line) life of ten years. Its market value is currently $16,000. The firm's marginal tax rate is 34%. What is its contribution to the initial outlay?

• A)$ 2,880
• B)$14,640
• C)$14,880
• D)$ 2,640

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