Question
Gerdin Inc. just purchased a piece of new equipment at a cost of $230,000. This equipment belongs to the MACRS 7-year depreciation class. The associated
Gerdin Inc. just purchased a piece of new equipment at a cost of $230,000. This equipment belongs to the MACRS 7-year depreciation class. The associated percentages for different depreciation classes are presented in the following table. The company plan to sell the equipment at the end of year 4 for $80,000. The company's marginal tax rate is 30%. Find out the incremental cash flow related to this sales at the end of year 4.
year | 3-year | 5-year | 7-year |
1 | 33.33% | 20.00% | 14.29% |
2 | 44.45% | 32.00% | 24.49% |
3 | 14.81% | 19.20% | 17.49% |
4 | 7.41% | 11.52% | 12.49% |
5 | 11.52% | 8.93% | |
6 | 5.76% | 8.92% | |
7 | 8.93% | ||
8 | 4.46% |
A.$77,555.6
B.$80,000
C.$71,852
D.$8,148
E.$2,444.4
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