Your firm purchased machinery with a 7-year MACRS life for $10 million. The project, however, will end after 5 years. If the equipment can be sold for $4.5 million at the completion of the project, and your firm's tax rate is 35%, what is the after-tax cash flow from the sale of the machinery?

Table 9.2
Tax depreciation allowed under MACRS

 

Year(s)	7 Year
1	14.29%
2	24.49%
3	17.49%
4	12.49%
5	8.93%
6	8.92%
7	8.93%
8	4.46%

Transcribed Image Text:

7.00 years S 10.00 million MACRS life of machiner Machinery cost Project life Selling price of machinery Tax rate 5.00 years S 4.50 million 35.00%