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A six year project involves equipment costing $3,460,000 that will be depreciated using the seven-year MACRS...

A six year project involves equipment costing $3,460,000 that will be depreciated using the seven-year MACRS schedule. If the estimated pre-tax salvage value for the equipment at the end of the project's life is $553,600, what is the after-tax salvage value for the equipment? Assume a marginal tax rate of 21 percent.

please show me how to do this by hand

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Expert Solution

asset cumulative depreciation rate for the first the project's life of 6 years under 7 year MACRS

=(14.29%+24.49%+17.49%+12.49%+8.93%+8.93%)

=86.62%

book value of the asset at end of project's life of six years

=3460000*(1-86.62%)

=462948

gain on the asset=553600-462948=90652

the after-tax salvage value for the equipment

=553600-90652*21%

=534563.08

the above is answer..

jeff jeffy answered 2 years ago
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