A proposed cost-saving device has an installed cost of $645,000. The device will be used in a five-year project, but is
Posted: Wed Mar 09, 2022 8:40 am
A proposed cost-saving device has an installed cost of $645,000.
The device will be used in a five-year project, but is classified
as manufacturing and processing equipment for tax purposes. The
required initial net working capital investment is $55,000, the
marginal tax rate is 35%, and the project discount rate is 9%. The
device has an estimated year 5 salvage value of $75,000. What level
of pre-tax cost savings do we require for this project to be
profitable? The CCA rate is 20%. (Do not round your
intermediate calculations. Round the final answer to 2 decimal
places. Omit $ sign in your response.)
The device will be used in a five-year project, but is classified
as manufacturing and processing equipment for tax purposes. The
required initial net working capital investment is $55,000, the
marginal tax rate is 35%, and the project discount rate is 9%. The
device has an estimated year 5 salvage value of $75,000. What level
of pre-tax cost savings do we require for this project to be
profitable? The CCA rate is 20%. (Do not round your
intermediate calculations. Round the final answer to 2 decimal
places. Omit $ sign in your response.)