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After-tax Net Salvage Value

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Carter Air Lines is now in the terminal year of a project. The equipment originally cost $20 million, of which 80% has been depreciated. Carter can sell the used equipment today to another airline for $5 million, and its tax rate is 40%. What is the equipment's after-tax net salvage value?

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Solution Summary

The solution explains how to calculate the after tax net salvage value

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Original cost $20 million
Accumulated depreciation 80% = 20X80%=$16 ...

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