1. A new piece of specialty equipment costs $1,750,000 and will be depreciated to an expected salvage value of $150,000 on a straight-line basis over its 4-year life. Assuming a tax rate of 30%, what is its after-tax salvage value if the equipment is actually sold after 3 years for $450,000?
$135,000
$315,000
$480,000
$620,000
$650,500
2. A new piece of specialty equipment costs $2,500,000 and will be depreciated to an expected salvage value of $400,000 on a straight-line basis over its 3-year life. Assuming a tax rate of 35%, what is its after-tax salvage value if the equipment is actually sold after 2 years for $1,250,000?
$97,500
$437,500
$812,500
$1,197,500
$1,250,000