Your firm needs a computerized machine tool lathe which costs $42,000 and requires $11,200 in maintenance for each year of its 4-year life. After three years, this machine will be replaced. The machine falls into the MACRS 5-year class life category. Assume a tax rate of 25 percent and a discount rate of 12 percent. If the lathe can be sold for $4,200 at the end of year 4, what is the after-tax salvage value?
Is there a way to solve in Excel?
rate positively ..
Computation of after tax salvage value - | |||||
a | Book value after 4 year = | 7,257.60 | |||
42000*(11.52%+5.76%) | |||||
b | Sales price = | 4,200.00 | |||
c=b-a | Profit on sale = | (3,057.60) | |||
d=c*25% | Tax on profit = | (764.40) | |||
e=b-d | Post tax salvage value = | 4,964.40 | |||
Ans = | 4,964.40 | ||||
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