Consider an asset that costs $202,400 and is depreciated straight-line to zero o
ID: 2708131 • Letter: C
Question
Consider an asset that costs $202,400 and is depreciated straight-line to zero over its 11-year tax life. The asset is to be used in a 3-year project; at the end of the project, the asset can be sold for $25,300.
If the relevant tax rate is 33 percent, what is the aftertax cash flow from the sale of this asset? (Do not round your intermediate calculations.)
Consider an asset that costs $202,400 and is depreciated straight-line to zero over its 11-year tax life. The asset is to be used in a 3-year project; at the end of the project, the asset can be sold for $25,300.
Explanation / Answer
SV3 = 25300
BV3 = 77500
NSV3 = 25300-(25300-77500)*0.33 = 42526