Darwin Systems sells a fixed asset for $126,000 when its book value is $149,000. If the company's marginal tax rate is 38%, what will be the effect on cash flows of this sale (i.e., what will be the after-tax free cash flow from the sale)?

Darwin Systems sells a fixed asset for $126,000 when its book value is $149,000. If the company's marginal tax rate is 38%, what will be the effect on cash flows of this sale (i.e., what will be the after-tax free cash flow from the sale)?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter6: Accounting For Financial Management

Section: Chapter Questions

Problem 11P: The Berndt Corporation expects to have sales of 12 million. Costs other than depreciation are...

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Definition Definition Cash that is left over after a company has paid for its operating and capital expenses. Unlike net income or earnings, free cash flow excludes non-cash expenses of the income statement and includes the expenditures on equipment and assets. Free cash flow also helps potential shareholders to evaluate how quickly the company can pay interest and dividends.

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