Question

Your firm purchased machinery for $9.4 million and received immediate 100% bonus depreciation. The project, will...

Your firm purchased machinery for $9.4 million and received immediate 100% bonus depreciation. The project, will end after 5 years. If the equipment can be sold for $3.9 million at the completion of the project, and your firm’s tax rate is 21%, what is the after-tax cash flow from the sale of the machinery? (Enter your answer in millions rounded to 4 decimal places.)

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Answer #1
Answer Statement Computing After tax Cash Flows from Machinery
Sale Proceeds 3.9000
Less Book Value 0.0000 (Since the Machinery is Entitled for 100% Bonus Depreciation)
Capital Gain on sale 3.9000
Less Tax @21% 0.8190
Net Cash Flow from sale of Machinery 3.0810
Hence the After tax Cash flow from Machinery sale = $3.0810 Million
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