Question
Compute the after-tax salvage value from the following data assuming the equipment is only 50% depreciated. Equipments original cost $29,000,000 Depreciation (100%) 29,000,000 Book value
Compute the after-tax salvage value from the following data assuming the equipment is only 50% depreciated.
Equipment’s original cost $29,000,000
Depreciation (100%) 29,000,000
Book value $ 0
Gain on sale = $8,000,000 – $0 = $8,000,000.
Tax on gain = $8,000,000(0.25) = $2,000,000.
AT salvage value = $8,000,000 – $2,000,000 = $6,000,000
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Fundamentals Of Corporate Finance
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
13th Edition
1265553602, 978-1265553609
