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A proposed cost-saving device has an installed cost of $652,000. The device will be used in a five-year project but is classified as three-year MACRS (MACRS Table) property for tax purposes. The required initial net working capital investment is $47,500, the marginal tax rate is 34 percent, and the project discount rate is 13 percent. The device has an estimated Year 5 salvage value of $72,500. Required: What level of pretax cost savings do we require for this project to be profitable?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91590522

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