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Your Company is considering buying a machine for $25,000. If bought, the machine will produce annual cost savings of $3,000 for the next 5 years; these cash flows will be taxed at the company’s tax rate of 35%. The machine will be depreciated over the 5 year period using the accelerated depreciation percentages allowable in the United States. At the end of the 5th year, the machine will sold; your estimate of its salvage value at this point is $4,000, even though for accounting purposes its book value is $1,440. What is the cash flow from salvage value?

Financial Management, Finance

  • Category:- Financial Management
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