Question

Consider an asset that costs \$584,000 and is depreciated straight-line to zero over its eight-year tax...

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

Homework Answers

Answer #1
 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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