Consider an asset that costs $584,000 and is depreciated straight-line to zero over its eight-year tax life. The asset is to be used in a five-year project; at the end of the project, the asset can be sold for $182,000. If the relevant tax rate is 21 percent, what is the aftertax cash flow from the sale of this asset? (Do not round intermediate calculations.)
Multiple Choice
$168,852
$219,000
$182,000
$173,970
$189,770
VALUE OF THE ASSEST | 584,000.00 | |
DEP PER YEAR | 73,000.00 | 584000/8 |
DEP VLAUE IN 5 YEARS | 365,000.00 | =584000-73000 |
BOOK VALUE OF THE ASSEST AT THE END OF | ||
5 YEAR | 219,000.00 | =584000-365000 |
SALE OF THE ASSEST | 182,000.00 | |
PROFIT | -37,000.00 | LOSS |
SO TAX IS | 0.00 | NILL |
CASH FLOW | 182,000.00 | =0+182000 |
SO THE CORRECT OPTIN IS C |
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