Question
XYZ Company bought a new machine that cost $800,000 on 1/1/21. The machine had a useful life of 8 years. XYZ Company used straight-line depreciation
XYZ Company bought a new machine that cost $800,000 on 1/1/21. The machine had a useful life of 8 years. XYZ Company used straight-line depreciation with an estimated salvage value of $0. XYZ Company is subject to an income tax rate of 30%. XYZ Company sold the machine on 1/1/26 (after using the machine for exactly 5 full years.) In the next 3 questions, you are to determine the Net Cash Inflow (NCF) from the sale of the machine on 1/1/26.
- If the machine was sold on 1/1/26 for $375,000, the Net Cash Inflow (NCF) is:
A. $375,000
B. $252,500
C. $352,500
D. $452,500
- If the machine was sold on 1/1/26 for $290,000, the Net Cash Inflow (NCF) is:
A. $290,000
B. $493,000
C. $393,000
D. $293,000
- If the machine was sold on 1/1/26 for $300,000, the Net Cash Inflow (NCF) is:
A. $300,000
B. $400,000
C. $200,000
D. $500,000
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