Question
Consider an asset that costs $750,000 and can be depreciated at 20 percent per year (Class 8) over its eight-year life. The asset is to
Consider an asset that costs $750,000 and can be depreciated at 20 percent per year (Class 8) over its eight-year life. The asset is to be used in a three-year project; at the end of the project, the asset can be sold for $320,000. The company faces a tax rate of 26%. The sale of this asset will close the asset class.
A. What is the after-tax cash flow from the sale of the asset?
B. What is the after-tax cash flow from the sale of the asset if the asset were to be sold for 480,200?
C. What is the after-tax cash flow from the sale of the asset if the asset were to be sold for 760,200?
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