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You are tasked with evaluating the purchase of a vending machine for the snack room. The base price is $4,000 and it would cost another $1,000 to...

You are tasked with evaluating the purchase of a vending machine for the snack room. The base price is $4,000 and it would cost another $1,000 to modify the machine to install the machine. The equipment falls in the MACRS 3 year class of depreciation with rates of 33%, 45%, 15% and 7%. The machine would require an investment in snacks (inventory/net operating working capital) of $800. The machine would produce revenue of $3,000 per year with costs of $800 per year. The firm's tax rate is 31%. The firm plans on selling the machine at the end of three years for $1500 and recovering their investment in net working capital at that time as well.

What is the net sale price at time 3 when the equipment is sold?

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The net sale price at time... View the full answer

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370.50 book value at year 3... View the full answer

1 comment
  • please note I have used actual MACRS 3yr class depreciation rates
    • payaljain3
    • Aug 06, 2018 at 11:59pm

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