An asset used in a 4-year project falls in the 5-year MACRS class (MACRS Table)
ID: 2790968 • Letter: A
Question
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 $15,480,000 and will be sold for $3,440,000 at the end of the project.
If the tax rate is 30 percent, what is the aftertax salvage value of the asset?
Answer Options:
3,210,483
2,408,000 (please note this is not the rigt answer)
3,669,517
3,371,007
3,049,959
Required:If the tax rate is 30 percent, what is the aftertax salvage value of the asset?
Answer Options:
3,210,483
2,408,000 (please note this is not the rigt answer)
3,669,517
3,371,007
3,049,959
Explanation / Answer
aftertax salvage value of the asset 3,210,483.00 Dear Student Thank you for using Chegg Please find below the answer and please give thumbs up Statementshowing Computations Year Beginning Value Dep rate Depreciation Ending Value 1.00 15,480,000.00 20% 3,096,000.00 12,384,000.00 2.00 12,384,000.00 32% 4,953,600.00 7,430,400.00 3.00 7,430,400.00 19.20% 2,972,160.00 4,458,240.00 4.00 4,458,240.00 11.52% 1,783,296.00 2,674,944.00 Value at end 2,674,944.00 Sale Value 3,440,000.00 Gain on Sale 765,056.00 Tax on Gain = 765056*.30 229,516.80 aftertax salvage value of the asset = 3440,000 - 229,516.80 3,210,483.20
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