Consider a machine which costs $115,000 now and which has a useful life of seven years.This machine will require a major overhaul at the end of the fourth year which will cost "X" dollars.If the tax rate is 40%,and if the after-tax cash outflow for this overhaul is $3,600,then the amount of "X" in dollars is:

Question

Quizplus · Accepted Answer

After-tax cost = (1 - Tax rate)F1F1F1S1F1F1F10 Tax-deductible cash expense
$3,600 = (1 - 0.40)F1F1F1S1F1F1F10 Tax-deductible cash expense
Tax deductible cash expense = $3,600 F1F1F1S1F1F1F10 0.60 = $6,000

Consider a Machine Which Costs $115,000 Now and Which Has