A specially coated mold for manufacturing tires (MACRS-GDS 3-year property) costs $35,000 and has a salvage value of $1,750 after a useful life of 5 years. The mold generates a net savings of $14,000 per year. The corporate tax rate is 25%. Find the after-tax cash flow for each year using MACRS-GDS allowances.
A specially coated mold for manufacturing tires (MACRS-GDS 3-year property) costs $35,000 and has a salvage value of $1,750 after a useful life of 5 years. The mold generates a net savings of $14,000 per year. The corporate tax rate is 25%. Find the after-tax cash flow for each year using MACRS-GDS allowances.
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 9P
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A specially coated mold for manufacturing tires (MACRS-GDS 3-year property) costs $35,000 and has a salvage value of $1,750 after a useful life of 5 years. The mold generates a net savings of $14,000 per year. The corporate tax rate is 25%. Find the after-tax cash flow for each year using MACRS-GDS allowances.
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