Question
Three years ago, the Mori Foods Company acquired a bean processing machine. The machine cost $60,000 and is being depreciated using the straight-line method over
Three years ago, the Mori Foods Company acquired a bean processing machine. The machine cost $60,000 and is being depreciated using the straight-line method over a 10-year period to an estimated salvage value of $0. A new, improved processor is now available, and the firm is considering making a switch. The firms marginal tax rate is 40 percent. What are the after-tax cash flow effects of selling the old processing unit if it can be sold for the following prices? Round your answers to the nearest dollar. Don't leave any cells blank. Enter zero if not applicable.
$42,000
Tax saving on tax loss: $
Tax on depreciation recapture: $
Capital gains tax: $
$32,000
Tax saving on tax loss: $
Tax on depreciation recapture: $
Capital gains tax: $
$58,700
Tax saving on tax loss: $
Tax on depreciation recapture: $
Capital gains tax: $
$61,500
Tax saving on tax loss: $
Tax on depreciation recapture: $
Capital gains tax: $
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started