A proposed cost-saving device has an installed cost of $810,000
A proposed cost-saving device has an installed cost of $810,000. 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 $63,000, 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 $88,000. What level of pretax cost savings do we require for this project to be profitable? MACRS schedule.
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