Phone Home, Inc. purchased some fixed assets 2 years ago at a cost of $38,700. It no longer needs these assets so it is going to sell them today for $25,467. The assets are classified as 5-year property for MACRS.

What is the net cash flow from this sale if the firm's tax rate is 30 percent?

MACRS 5-year property

Year Rate

1 20.00%

2 32.00%

3 19,20%

4 11.52%

5 11.52%

6 5.76%

ANSWER