Question
4. Consider an asset that costs $639,000 and is depreciated straight-line to zero over its nine-year tax life. The asset is to be used in
4.
Consider an asset that costs $639,000 and is depreciated straight-line to zero over its nine-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 $166,000. If the relevant tax rate is 30 percent, what is the aftertax cash flow from the sale of this asset? |
Aftertax salvage value | $ |
5.
Keiper, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $3.00 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $2,180,000 in annual sales, with costs of $875,000. The tax rate is 30 percent and the required return on the project is 9 percent. What is the project |
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