A business purchases depreciable equipment for 215 and sells it a few years later for 172. At the time of the sale, accumulated depreciation totals 123. If the company's tax rate is 35, what is the total after-tax cash flow that will result from selling this asset?

A business purchases depreciable equipment for 215 and sells it a few years later for 172. At the time of the sale, accumulated depreciation totals 123. If the company's tax rate is 35, what is the total after-tax cash flow that will result from selling this asset?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 6CE

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Definition Definition Net amount of cash that an entity receives and expends over the course of a given period. For a business to continue operating, positive cash flows are required, and they are also necessary to produce value for investors. Investors in particular prefer to see growing cash flows even after capital expenditures have been paid for (which is known as free cash flow).

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A company purchases depreciable equipment for $215 and sells it a few years later for $180. At the time of the sale, accumulated depreciation totals $120. If the company's tax rate is 36%, what is the total after-tax cash flow that will result from selling this asset? Answer
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