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Your firm needs a machine which costs $125,000, and requires $5,000 in maintenance for each year...

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Finance

Your firm needs a machine which costs $125,000, and requires$5,000 in maintenance for each year of its three-year life. Afterthree years, this machine will be replaced. The machine falls intothe MACRS three-year class life category. Assume a tax rate of 35percent and a discount rate of 10 percent. If this machine can besold for $15,000 at the end of year 3, what is the after-taxsalvage value?

$11,692.69

$9,750.00

$12,991.88

$9,262.50

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