Sale of Partially Depreciated Asset
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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))
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Solution Summary
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.
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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 = ...
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