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Power Manufacturing has equipment that it purchased 6 years ago for $2.500,000. The equipment was used for a project that was
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Answer #1

$472,250

After tax salvage value = Market value of equipment -/+ Tax on Profit on sale/Tax shield on loss on sale

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

A C 1 Purchased Price of Equipment Useful life of equipment (years) Annual depreciation (SLM) $2,500,000.00 2 3 8 $312,500.00

Cell reference -

А В C 1 Purchased Price of Equipment Useful life of equipment (years) 8 Annual depreciation (SLM) 2500000 2 -C2/C3 4 Book val

Hope this will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.

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