Question

A firm has just purchased a new piece of equipment for $23,000. The equipment will cost...

A firm has just purchased a new piece of equipment for $23,000. The equipment will cost an additional $2,000 to be delivered and installed. Based on IRS guidelines, the equipment will be depreciated using a 5-year MACRS schedule. The firm plans on using the equipment for three years and then selling the equipment for $15,000. The tax rate facing the firm is 34%. What will be the cash flow from selling the equipment in three years?

$11,956

$9,852

$12,348

$12,152

$9,472

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Answer #1

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