A proposed cost-saving device has an installed cost of $780,000. The device will be used in a five-year project but is classified as three-year MACRS property for tax purposes. The required initial net working capital investment is $60,000, the marginal tax rate is 34 percent, and the project discount rate is 10 percent. The device has an estimated Year 5 salvage value of $85,000. What level of pretax cost savings do we require for this project to be profitable? MACRS schedule.
Pretax cost savings