Question8 A machine which was bought 3 years ago for $10,000 is depreciated on a straight-line basis over 5 years. If the corporate tax rate is 32% and the machines is sold for $4,500, what is the free cash flow for the sale, i.e. what is its after-tax salvage cash flow? The after-tax salvage cash flow is $[input] (Answer to the nearest 1 dollar) Maximum marks: 10 Flag question undefined

Question

BlackTom AI · Accepted Answer

First, determine the annual depreciation under straight-line: cost 10,000 over 5 years gives annual depreciation of 10,000 / 5 = 2,000 per year.
Next, after 3 years, accumulated depreciation = 2,000 × 3 = 6,000, so the book value at sale = original cost − accumulated depreciation = 10,000 − 6,000 = 4,000.
The machine is sold for 4,500, so the gain on sale = sale price − book value = 4,500 − 4,000 = 500.
Tax on the gain at 32% = 500 × 0.32 = 160.
After-tax salvage cash flow (free cash flow from the sale) = sale price − taxes = 4,500 − 160 = 4,340.
Thus, the after-tax salvage cash flow is 4,340 (rounded to the nearest dollar).

查看解析

登录即可查看完整答案

类似问题

According to class, what is typically the LARGEST cost to owning a new car?

What is the largest cost to owning a new car, not including the actual price paid for the car?

In a consumer society, many adults channel creativity into buying things

Economic stress and unpredictable times have resulted in a booming industry for self-help products

People born without creativity never can develop it

A product has a selling price of $20, a contribution margin ratio of 40% and fixed cost of $120,000. To make a profit of $30,000. The number of units that must be sold is: Type the number without $ and a comma. Eg: 20000

Which of the following statement regarding cost is correct:

更多留学生实用工具

考试浏览器助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单