Suppose you sell a fixed asset for $125,000 whenit's book value is $139,000. If your company'smarginal tax rate is 30%, what will be the effecton cash flows of this sale (i.e., what will be theafter-tax free cash flow of this sale)?a. $9,800b. $14,000c. $111,300d. $129,200

Step 1: Define Tax-ShieldFirms use the tax-shield amount to save money by acquiring tax returns on…

Answered: Suppose you sell a fixed asset for…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

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Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 16EA: Project B cost $5,000 and will generate after-tax net cash inflows of $500 in year one, $1,200 in...

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Suppose you sell a fixed asset for $125,000 when it's book value is $139,000. If your company's marginal tax rate is 30%, what will be the effect on cash flows of this sale (i.e., what will be the after-tax free cash flow of this sale)? a. $9,800 b. $14,000 c. $111,300 d. $129,200