Consider an asset that costs $684,600 and is depreciated straight-line to zero o
ID: 2504500 • Letter: C
Question
Consider an asset that costs $684,600 and is depreciated straight-line to zero over its seven-year tax life. The asset is to be used in a four-year project; at the end of the project, the asset can be sold for $135,300.(Do not round intermediate calculations.)
If the relevant tax rate is 35 percent, what is the aftertax cash flow from the sale of this asset?
Consider an asset that costs $684,600 and is depreciated straight-line to zero over its seven-year tax life. The asset is to be used in a four-year project; at the end of the project, the asset can be sold for $135,300.(Do not round intermediate calculations.)
Explanation / Answer
depriciation value in fourth year = 684600/7 = $ 97800
after tax cash flow = 135300 -(135300-97800)*0.35 = $ 122175