connect Making Capltal Investment Decisions Question 4 (of 8) value: 400 points

Question

connect Making Capltal Investment Decisions Question 4 (of 8) value: 400 points P10-7 Calculating Salvage Value [LO1 Consider an asset that costs $457,600 and is depreciated straight -line to zero over its 9-year tax life. The asset Is to be used in a 5-year project; at the end of the project, the asset can be sold for $57,200. Required: It the relevant tax rate is 32 percent, what is the aftertax cash flow from the sale of this asset? (Do not round O $98,778.0s O $38,896.00 O $109,175.73 O $103.976.89 O $661244.00 References eBook & Resources Multiple Choice Difficulty: Basic Section: 10.4 Mor P10-7 Calculating Salvage Value [LO1] Learning Objective: 10-01 How to determine

Explanation / Answer

Annual depreciation=457600/9=$50844.44

Hence book value as on date of sales=457600-(50844.44*5)=$203377.78

Hence loss on sales=($203377.78-$57200)=$146177.78

Hence after tax cash flow=Sale proceeds+(Tax rate*Loss on sales)

=57200+($146177.78*0.32)

which is equal to

$103976.89(APPROX).

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.