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Net cash flow on sale of assets

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Michael's Craft Supplies purchased some fixed assets 2 years ago at a cost of $38,700. It no longer needs these assets so it is going to sell them today for $25,000. The assets are classified as 5 year property for MACRS. What is the net cash flow from this sale if the firms tax rate is 30%?

MACRS 5 Year Property

Year Rate
1 20.00%
2 32.00%
3 19.20%
4 11.52%
5 11.52%
6 5.76%

a. $13,122.20
b. $18,576.00
c. $20,843.68
d. $23.072.80
e. $25,211.09

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Solution Summary

The solution explains how to calculate the net cash flow on sale of assets.

Solution Preview

First calculate the book value.
Depreciation for 2 years = 38,700 X (20%+32%) = ...

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