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Fairfield Co. is selling off some old equipment it no longer needs because its associated project has come to an end. The equipment originally cost
Fairfield Co. is selling off some old equipment it no longer needs because its associated project has come to an end. The equipment originally cost $21,000, of which 80% has been depreciated. The firm can sell the used equipment today for $5,000, and its tax rate is 40%. What is the equipment's after-tax salvage value for use in a capital budgeting analysis? Note that if the equipment's final market value is less than its book value, the firm will receive a tax credit as a result of the sale.
$4,540 | ||
$4,680 | ||
$5,760 | ||
$6,120 |
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