Problem:
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.
Requirement:
Question: If the lathe can be sold for $4,200 at the end of year 3, what is the after-tax salvage value?
Note: Please provide full description.