Aftertax salvage value of the equipment


Kaiser Mining is considering a project that will require the purchase of $980,000 in new equipment, which will be depreciated straight-line to zero over the 7-year life of the project. The equipment can be scrapped at the end of the project for 5% of its original cost. Annual sales are estimated at $420,000 and NWC will increase by 20% of sales. All NWC will be recouped in Year 7. The required return is 16% and the tax rate is 35%. What is the aftertax salvage value of the equipment?

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Finance Basics: Aftertax salvage value of the equipment
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