(SOLVED) Power Manufacturing has equipment that it purchased 6 years ago for $2,700,000.
Discipline: Finance
Type of Paper: Question-Answer
Academic Level: Undergrad. (yrs 1-2)
Paper Format: APA
Pages: 1
Words: 49
Question
Power Manufacturing has equipment that it purchased 6 years ago for $2,700,000. The equipment was used for a project that was intended to last for 8 years and was being depreciated over the life of the project.
However, due to low demand, the project is being shut down. The equipment was depreciated using the straight-line method and can be sold for $430,000 today. The company's tax rate is 40 percent.
The aftertax salvage value of the equipment is $______.
Expert Solution Preview
Annual depreciation=(Cost-Residual value)/Useful life
= (2,700,000/8)
= $337500/year
Hence book value as on date of sale=Cost-Accumulated depreciation
=
