Consider an asset that costs $780,000 and is depreciated straight-line to zero over its eight-year tax life.

Question:

Consider an asset that costs $780,000 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 $135,000. If the relevant tax rate is 35 percent, what is the after tax cash flow from the sale of this asset?