Please make sure you have the right answer! I have asked this question too many times and all the answers were wrong!!! A proposed cost-saving device has an installed cost of $820,000. The device will be used in a five-year project but is classified asthree-year MACRS property for tax purposes (MACRS schedule). The required initial net working capital investment is $89,000, the taxrate is 22 percent, and the project discount rate is 8 percent. The device has an estimated Year 5 salvage value of $136,000. Whatlevel of pretax cost savings do we require for this project to be profitable?Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.Answer is complete but not entirely correct.Pretax costsavings$212,737.59

Answered: A proposed cost-saving device has an…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 4P

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Please make sure you have the right answer! I have asked this question too many times and all the answers were wrong!!!

A proposed cost-saving device has an installed cost of $820,000. The device will be used in a five-year project but is classified as
three-year MACRS property for tax purposes (MACRS schedule). The required initial net working capital investment is $89,000, the tax
rate is 22 percent, and the project discount rate is 8 percent. The device has an estimated Year 5 salvage value of $136,000. What
level of pretax cost savings do we require for this project to be profitable?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
Answer is complete but not entirely correct.
Pretax cost
savings
$
212,737.59

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The Company manufacture and sells goods after bearing lots of costs such as material labor, machinery, expenses, etc. The company should invest in those machines which control the company's cost so the Burdon of the cost will be low.

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