Capital gains tax rate	15
Income tax rate	30.00

PROBLEM 3
Old Asset
Book Value
Proceeds on Sale
Initial Purchase Price
Outputs
Cash Distribution Table	Distribution	Tax Effects
Book Value
Capital Gain
Capital Loss
Recaptured Depreciation
Proceeds on Sale
PROBLEM 4
Inputs
Cost of New Asset
Installation Costs
Old Asset
Book Value
Proceeds on Sale
Initial Purchase Price
Decrease in Working Capital
Outputs
Cash Distribution Table	Distribution	Tax Effects
Book Value
Capital Gain
Capital Loss
Recaptured Depreciation
Proceeds on Sale

1. 2. Income tax rate = 30% Capital gains tax rate = 15% Your company is considering investing in a new asset. The old asset, which has a book value of $100.000, can be sold for $85,000. The purchase price of the old asset was $450,000. What are the tax effects of the sale of the old asset? Using the chart below, calculate the tax effects of this sale. Book Value 200,000 Proceeds on Sale 377.000 Initial Purchase Price 350.000 Your company is considering investing in a new asset. The old asset, which has a book value of $100.000, can be sold for $100,000. The purchase price of the old asset was $500,000. What are the tax effects of the sale of the old asset? Use the information below and from Problem 2 to find the net cash outlay for this project. Cost of New Asset 385,500 Installation Costs 0 Decrease in Working Capital 6,000 3. 4