A proposed cost-saving device has an installed cost of $664,000. The device will be used in...

A proposed cost-saving device has an installed cost of $664,000. The device will be used in a five-year project but is classified as three-year MACRS (MACRS Table) property for tax purposes. The required initial net working capital investment is $53,500, the marginal tax rate is 34 percent, and the project discount rate is 13 percent. The device has an estimated Year 5 salvage value of $78,500.

What is the depreciation each year of the project?

What is the aftertax salvage value of the equipment?

Aftertax salvage value $ What level of pretax cost savings do we require for this project to be profitable?

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jeff jeffy answered 9 months ago

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