-8 Book value and taxes on sale of assets Troy Industries purchased a new machine 3 years ago for $80,000. It is being depreciated under MACRS with a 5-year recovery period using the percentages given in Table 4.2 on page 000. Assume a 40% tax rate. a. What is the book value of the machine? b. Calculate the firm's tax liability if it sold the machine for each of the following amounts: $100,000; $56,000; $23,200; and $15,000.

EBK CFIN
6th Edition
ISBN:9781337671743
Author:BESLEY
Publisher:BESLEY
Chapter10: Project Cash Flows And Risk
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11-8 Book value and taxes on sale of assets Troy Industries purchased a new machine
3 years ago for $80,000. It is being depreciated under MACRS with a 5-year recovery
period using the percentages given in Table 4.2 on page 000. Assume a 40% tax rate.
a. What is the book value of the machine?
b. Calculate the firm's tax liability if it sold the machine for each of the following
amounts: $100,000; $56,000; $23,200; and $15,000.
Transcribed Image Text:11-8 Book value and taxes on sale of assets Troy Industries purchased a new machine 3 years ago for $80,000. It is being depreciated under MACRS with a 5-year recovery period using the percentages given in Table 4.2 on page 000. Assume a 40% tax rate. a. What is the book value of the machine? b. Calculate the firm's tax liability if it sold the machine for each of the following amounts: $100,000; $56,000; $23,200; and $15,000.
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