Give true answer don't use chatgpt What is the after-tax cash flow that resultsfrom the sale of a capital asset for$150,000? Assume that it has a book valueof $100,000 and a 40% tax rate.A. $150,000B. $90,000C. $130,000D. $60,000E. $170,000

Step 1: Define Capital AssetFirms purchase capital assets to run their business operation and…

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Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

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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The Berndt Corporation expects to have sales of 12 million. Costs other than depreciation are expected to be 75% of sales, and depreciation is expected to be 1.5 million. All sales revenues will be collected in cash, and costs other than depreciation must be paid for during the year. Berndts federal-plus-state tax rate is 40%. Berndt has no debt. a. Set up an income statement. What is Berndts expected net income? Its expected net cash flow? b. Suppose Congress changed the tax laws so that Berndts depreciation expenses doubled. No changes in operations occurred. What would happen to reported profit and to net cash flow? c. Now suppose that Congress changed the tax laws such that, instead of doubling Berndts depreciation, it was reduced by 50%. How would profit and net cash flow be affected? d. If this were your company, would you prefer Congress to cause your depreciation expense to be doubled or halved? Why?
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What is the after-tax cash flow that results from the sale of a capital asset for $150,000? Assume that it has a book value of $100,000 and a 40% tax rate. A. $150,000 B. $90,000 C. $130,000 D. $60,000 E. $170,000