Consider an asset that costs $237,600 and is depreciated straight-line to zero over its 6-year tax life. The asset is to be used in a 2-year project; at the end of the project, the asset can be sold for $29,700. If the relevant tax rate is 31 percent, the aftertax cash flow from the sale of this asset is $ ????
Round your answer to 2 decimal places. (e.g., 32.16))© BrainMass Inc. brainmass.com June 4, 2020, 1:35 am ad1c9bdddf
Since the asset is depreciated over six years, the amount of depreciation per year is $237,600/6=$39,600. After tow years, the machine will have a value on the books of 4*$39,600 = ...
This solution analyzes the sale of a partially depreciated asset. In this case, the asset is sold for less than the book value. The cases analyzes consequences.