PLEASE SHOW WORK!!! An asset used in a 4-year project falls in the 5-year MACRS

Question

PLEASE SHOW WORK!!!

An asset used in a 4-year project falls in the 5-year MACRS class (MACRS Table) for tax purposes. The asset has an acquisition cost of $8,184,000 and will be sold for $1,848,000 at the end of the project. If the tax rate is 33 percent, the aftertax salvage value of the asset is $ .

PLEASE SHOW WORK!!!

An asset used in a 4-year project falls in the 5-year MACRS class (MACRS Table) for tax purposes. The asset has an acquisition cost of $8,184,000 and will be sold for $1,848,000 at the end of the project. If the tax rate is 33 percent, the aftertax salvage value of the asset is $ .

Explanation / Answer

Hi,

Please find the answer as follows:

After Tax Salvage Value = Sales Value +/- Tax on Gain/Loss on Sale of Asset

After Tax Salvage Value = 1848000 + 33%*(8184000*(1-.20-.32-.192-.1152)-1848000) = 1704844.42 or 1704844

Answer is 1704844.42 or 1704844.

Thanks.

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