McPherson Company Must Purchase a New Milling Machine A) $9,367
B) $9,860
C) $10,379
D) $10,925
E) $11,500

Multiple Choice

McPherson Company must purchase a new milling machine.The purchase price is $50,000, including installation.The machine has a tax life of 5 years, and it can be depreciated according to the following rates.The firm expects to operate the machine for 4 years and then to sell it for $12,500.If the marginal tax rate is 25%, what will the after-tax salvage value be when the machine is sold at the end of Year 4? $$\begin{array} { c c } \text { Year } & \text { Depreciation Rate } \\1 & 0.20 \\2 & 0.32 \\3 & 0.19 \\4 & 0.12 \\5 & 0.11 \\6 & 0.06\end{array}$$

A) $9,367
B) $9,860
C) $10,379
D) $10,925
E) $11,500