If the after tax interest is 10%, what is the after tax present worth of machinery that has a first cost of $66,000 and annual savings of $7,700?

If the after tax interest is 10%, what is the after tax present worth of machinery that has a first cost of $66,000 and annual savings of $7,700? The machinery is sold for $1100 salvage value at the end of a seven year life. The corporate tax rate is 59%.

Solutions

Expert Solution

Cost of Machine = $66,000

Salvage Value = $1100

Life of Asset = 7 years

Assume Depreciation as per straight line method

Dep per year = ( $66,000 - $7,000 ) / 7 = $9271.43

After tax present worth of Machine = $23,435

Rahul Sunny answered 1 year ago

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