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Marshall-Miller & Company is considering the purchase of a new machine for $60,000, installed. The machine...

  1. Marshall-Miller & Company is considering the purchase of a new machine for $60,000, installed. The machine has a tax life of 5 years, and it can be depreciated according to the depreciation rates below. The firm expects to operate the machine for 5 years and then to sell it for $18,500. If the marginal tax rate is 40%, what will the after-tax salvage value be when the machine is sold at the end of Year 5?

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

MACRS %

20%

32%

19%

12%

11%

6%

Depreciation expense

7,200

Book value

48,000

3,600

$0

If we sell at the end of year 5 for $18,500 then determine if we have a gain or a loss and the appropriate tax consequence

Explain answer and how to solve step by step, financial calculations, and fill out the chart too. Thanks.

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Answer #1

GIVEN ALL SIMPLE CALCULATIONS, EVERYTHING IS SHOWN. GO THROUGH, ANY DOUBTS, HAPPY TO HELP YOU

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