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Capital gains taxes Hamberg Manufacturing identified two vehicles from the vehicle pool that can be sold. The purchase prices were $2,500 and $3,000 for Vehicle
Capital gains taxes Hamberg Manufacturing identified two vehicles from the vehicle pool that can be sold. The purchase prices were $2,500 and $3,000 for Vehicle 1 and Vehicle 2, respectively, and the expected selling prices are $1,350 and $1,900 for Vehicle 1 and Vehicle 2, respectively. However, only one vehicle will be sold. Management wants to sell the vehicle with the lowest capital gains tax. Assume a 40% tax rate.
a. Calculate the capital gain for each vehicle.
b. Which vehicle should be sold? Explain your answer.
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