Eight years ago, a company purchased an injection molding machine at $40,000. It has been depreciated according to conventional straight-line method (book depreciation) over a 12-year service life. The estimated salvage value at the end of 12 years (from the purchase) was $4,000. This estimate is still good. The machine has a current market value of $15,000. If the machine is sold on the market, what would be the net proceeds (net salvage value after tax) from the sale? The firm's income tax rate is 40%. Any gains (or losses) will be taxed (or credited) at 40%.
Eight years ago, a company purchased an injection molding machine at $40,000. It has been depreciated according to conventional straight-line method (book depreciation) over a 12-year service life. The estimated salvage value at the end of 12 years (from the purchase) was $4,000. This estimate is still good. The machine has a current market value of $15,000. If the machine is sold on the market, what would be the net proceeds (net salvage value after tax) from the sale? The firm's income tax rate is 40%. Any gains (or losses) will be taxed (or credited) at 40%.
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter11: Cash Flow Estimation And Risk Analysis
Section: Chapter Questions
Problem 10P: St. Johns River Shipyards welding machine is 15 years old, fully depreciated, and has no salvage...
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Eight years ago, a company purchased an injection molding machine at $40,000. It has been
salvage value after tax) from the sale? The firm's income tax rate is 40%. Any gains (or losses) will be taxed (or credited) at 40%.
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