Question

You are evaluating a potential purchase of several light-duty trucks. The initial cost of the trucks will be $196,000. The trucks fall in the MACRS 5-year class that allows depreciation of 20% the first year, 32% the second year, 19% the third year, 12% the fourth year, 11% the fifth year, and 6% the sixth year. You expect to sell the trucks for 29,400 at the end of five years. The expected revenue associated with the trucks is $148,000 per year with annual operating costs of $74,000. The firm's marginal tax rate is 20.0%. What is the after-tax cash flow associated with the sale of the equipment?

Question 33 options:

	$23,520
	$25,872
	$17,640
	$14,112
	$8,232

Answer 1

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -