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    After tax cash flow from the sale of the equipment

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    Salvage Value. Quick Computing installed its previous generation of computer chip manufacturing equipment 3 years ago. Some of the older equipment will become unnecessary when the company goes into production of it's new product. The obsolete equipment, which originally cost $40 million, has been depreciated straight-line over an assumed tax life of 5 years, but it can be sold now for $18 million. The firm's after tax rate is 35 percent. What is the after tax cash flow from the sale of the equipment?

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    Solution Summary

    The solution provides the steps to calculate the after tax cash flow from the sale of the equipment.