A proposed cost-saving device has an installed cost of $710,000. The device will be used in...

A proposed cost-saving device has an installed cost of $710,000. The device will be used in a five-year project but is classified as three-year MACRS property for tax purposes. The required initial net working capital investment is $120,000, the marginal tax rate is 23 percent, and the project discount rate is 10 percent. The device has an estimated Year 5 salvage value of $89,000. What level of pretax cost savings do we require for this project to be profitable? MACRS schedule. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Pretax cost savings=?

Expert Solution

Hence, Pretax cost savings are $197,688.29

jeff jeffy answered 2 months ago

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