EBK CFIN
EBK CFIN
5th Edition
ISBN: 9781305888036
Author: BESLEY
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 10, Problem 10PROB
Summary Introduction

Profit or loss is the difference of the sale value of asset and book value when the asset is sold.

Calculate the tax on profit or loss as follows:

Tax on profit or (loss)=(Sale valueBook value)×Tax rate

After tax cash flows are the cash flows remaining after payment of tax.

After tax net cash flow=(Sale valueProfit(loss))

TEC is selling its assets with book value of $6,000 for $4,000. Tax rate is 35%.

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