Homework Answers
Book Value after 4 years = Purchase Price - Accumulated Depreciation
= $20,000 - [$20,000 * (0.20 + 0.32 + 0.192 + 0.1152)]
= $20,000 - [$20,000 * 0.8272] = $20,000 - $16,544 = $3,456
After-tax Salvage Value = Salvage Value - [Tax Rate * (Salvage Value - Book Value)]
= $13,000 - [0.35 * ($13,000 - $3,456)]
= $13,000 - [0.35 * $9,544]
= $13,000 - $3,340.40 = $9,659.60
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