A mining corporation purchased some production machinery. It depreciated by SOYD depreciation. After 5 years of use, the company decided to sell the machinery. Given the data and information about the machine and it’s deprecation, determine whether or not this investment was is worth it.
Relevant Information:
Machinery cost $120,000.
Company depreciated it by SOYD depreciation, 5 year depreciable life and zero salvage value.
34% incremental tax rate.
The company used the machinery for 5 years.
Mine operating costs reduced by $32,000 per year.