Consider an asset that costs $687,400 and is depreciated straight-line to zero o
ID: 2649150 • Letter: C
Question
Consider an asset that costs $687,400 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 $135,700. (Do not round intermediate calculations.)
If the relevant tax rate is 30 percent, what is the aftertax cash flow from the sale of this asset?
The answer is not: -$51,555.00
Required:If the relevant tax rate is 30 percent, what is the aftertax cash flow from the sale of this asset?
The answer is not: -$51,555.00
Explanation / Answer
Answer:
Sale value of the assets = $135700
Book value of the asset = Cost