Consider an asset that costs $510,400 and is depreciated straight-line to zero o
ID: 2823562 • Letter: C
Question
Consider an asset that costs $510,400 and is depreciated straight-line to zero over its 11-year tax life. The asset is to be used in a 4-year project; at the end of the project, the asset can be sold for $63,800.
If the relevant tax rate is 31 percent, what is the aftertax cash flow from the sale of this asset? (Do not round your intermediate calculations.)
A.$44,022.00
B.$137,474.50
C.$1,191,158.00
D.$151,945.50
E.$144,710.00
Consider an asset that costs $510,400 and is depreciated straight-line to zero over its 11-year tax life. The asset is to be used in a 4-year project; at the end of the project, the asset can be sold for $63,800.
Explanation / Answer
depreciation annual=510400/11
=46400
book value of the at the end of a 4-year project
=510400-(46400*4)
=324800
what is the aftertax cash flow from the sale of this asset
=63800-(63800-324800)*31%
=144710
the above is answer..