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Mars Inc. is considering the purchase of a new machine that

Paper help Economics Mars Inc. is considering the purchase of a new machine that

Economics

Mars Inc. is considering the purchase of a new machine that

Mars Inc. is considering the purchase of a new machine that will reduce manufacturing costs by $5,00… Show more Mars Inc. is considering the purchase of a new machine that will reduce manufacturing costs by $5,000 annually. Mars will use the MACRS accelerated method to depreciate the machine, and it expects to sell the machine at the end of its 5-year operating life for $10,000. The firm expects to be able to reduce net operating working capital by $15,000 when the machine is installed, but required net operating working capital will return to its original level when the machine is sold after 5 years. Mars’ marginal tax rate is 40%, and it uses a 12% WACC to evaluate projects of this nature. The applicable depreciation rates are 20%, 32%, 19%, 12%, 11%, and 6%. If the machine costs $60,000, What is the tax on salvage value? • Show less

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