Consider an asset that costs $343,200 and is depreciated straight-line to zero over its 10-year tax life. The asset is to be used in a 4-year project; at the end of the project, the asset can be sold for $42,900.

Required :

If the relevant tax rate is 35 percent, what is the aftertax cash flow from the sale of this asset? (Do not round your intermediate calculations.)

$94,959.15

$778,647.00

$99,957.00

$27,885.00

$104,954.85

An asset used in a 4-year project falls in the 5-year MACRS class (MACRS Table) for tax purposes. The asset has an acquisition cost of $10,980,000 and will be sold for $2,440,000 at the end of the project.

Required:

If the tax rate is 34 percent, what is the aftertax salvage value of the asset?

$2,255,497

$1,610,400

$2,624,503

$2,368,272

$2,142,722