An equipment's with 5 years useful life is with initial cost of $5,000. After 5 years, the equipment's useful life will be 0. The equipment's value will be depreciated linearly. Tax rate=30%. What is the after tax residual value of this equipment at the end of 3th year if the equipment was sold at 4,000. $2800 $4200 $3400 $1500
An equipment's with 5 years useful life is with initial cost of $5,000. After 5 years, the equipment's useful life will be 0. The equipment's value will be depreciated linearly. Tax rate=30%. What is the after tax residual value of this equipment at the end of 3th year if the equipment was sold at 4,000. $2800 $4200 $3400 $1500
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:An equipment's with 5 years useful life is with initial cost of $5,000. After 5 years,
the equipment's useful life will be 0. The equipment's value will be depreciated
linearly. Tax rate=30%. What is the after tax residual value of this equipment at the
end of 3th year if the equipment was sold at 4,000.
$2800
$4200
$3400
$1500
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VIEWStep 2: Calculation of Depreciation per year
VIEWStep 3: Calculation of Accumulated Depreciation at the end of 3 years
VIEWStep 4: Calculation of Capital Gains
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VIEWStep 6: Calculation of After-tax residual value
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