A proposed cost-saving device has an installed cost of $585,000. The device will be used in...

A proposed cost-saving device has an installed cost of $585,000. 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 $45,000, the marginal tax rate is 35 percent, and the project discount rate is 12 percent. The device has an estimated Year 5 salvage value of $65000.

Required:

What level of pretax cost savings do we require for this project to be profitable? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Expert Solution

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jeff jeffy answered 2 years ago

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