What is the after-tax salvage value of the 3-year life

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Your firm needs a computerized machine tool lathe which costs $42,000 and requires $11,200 in maintenance for each year of its 3-year life. After three years, this machine will be replaced. The machine falls into the MACRS 3-year class life category. Assume a tax rate of 39 percent and a discount rate of 12 percent.

If the lathe can be sold for $4,200 at the end of year 3, what is the after-tax salvage value?

Reference no: EM13336047

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