A. $2,960,406
To find the BV at the end of four years, we need to find the accumulated depreciation for the first four years. Add the MACRS depreciation amounts for each of the first four years and multiply this percentage times the cost of the asset. We can then subtract this from the asset cost. Doing so, we get:
BV4 = $14,040,000 − $14,040,000(0.2000 + 0.3200 + 0.1920 + 0.1152)
BV4 = $2,426,112
Aftertax salvage value = $3,120,000 + ($2,426,112 − $3,120,000)(0.23)
Aftertax salvage value = $2,960,406
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