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A 275700$ tractor-trailer is being depreciated by the straight line method over five years to a...

A 275700$ tractor-trailer is being depreciated by the straight line method over five years to a final Book Value (BV) of zero. After three years the trailer is sold for a) 246750 $ (2 points) b) 97940$. (2 points) If the effective income tax rate is 5% what is the net cash inflow from the sale for

situation (a)

and

situation (b)? (tax saving is permitted.)

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Answer #1

In (b) Net Cash Flow = $97940 - (-$617) = $98557

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