1 2 345678 Input area: Costs A Depreciable life Consider an asset that costs $745,000 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 21 percent, what is the aftertax cash flow from the sale of this asset? Asset used in years Pretax salvage value Tax rate B 15 Output area: 16 17 Annual depreciation 18 Accumulated depreciation 19 Book value 20 Aftertax cash flow 21 22 23 Pretax salvage value Taxes Aftertax salvage value $745,000 8 5 $135,000 21% C D $93,125 E F 9 10 11 12 (Use cells A6 to B10 from the given information to complete this question. Taxes on the salvage value should be 13 negative for a tax liability and positive for a tax credit.) 14 G H

Consider an asset that costs $745,000 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 21 percent, what is the aftertax cash flow from the sale of this asset? 3 Input area: (Use cells A6 to B10 from the given information to complete this question. Taxes on the salvage value should be negative for a tax liability and positive for a tax credit.)