What is the expected after-tax cash flow from selling a piece of equipment if Orange Oval Paint purchases the equipment today for $370,000, the tax rate is 10 percent, the equipment would be sold in 3 years for $111,000, and accelerated depreciation is used where the depreciation rates in years 1, 2, 3, 4, and 5 would be 35 %, 30%, 15%, 10%, and 10%, respectively? The answer is a positive number. Input instructions: Round your answer to the nearest dollar. The answer is a positive number. dollars

What is the expected after-tax cash flow from selling a piece of equipment if Orange Oval Paint purchases the equipment today for $370,000, the tax rate is 10 percent, the equipment would be sold in 3 years for $111,000, and accelerated depreciation is used where the depreciation rates in years 1, 2, 3, 4, and 5 would be 35 %, 30%, 15%, 10%, and 10%, respectively? The answer is a positive number. Input instructions: Round your answer to the nearest dollar. The answer is a positive number. dollars

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 17P: The Perez Company has the opportunity to invest in one of two mutually exclusive machines that will...

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What is the expected after - tax cash flow from selling a piece of equipment if Probst purchases the equipment today for $548, 860.00, the tax rate is 39.9 percent, the equipment will be sold in 3 years for $98, 800.00, and the equipment will be depreciated to $72, 600.00 over 12 years using straight - line depreciation? $106, 885.74 (plus or minus $10) $262, 538.29 (plus or minus $10) - $72, 688.20 (plus or minus $10) $230,867.00 (plus or minus $10) None of the above is within $10 of the correct answer
Get the Correct option with calculation and explanation
Suppose you sell a fixed asset for $212,000 when its book value is $112,000. If your company’s marginal tax rate is 30 percent, what will be the effect on cash flows of this sale (i.e., what will be the after-tax cash flow of this sale)?
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