Question

In: Finance

Which of the following is a correct calculation for after-tax salvage value if salvage value and...

Which of the following is a correct calculation for after-tax salvage value if salvage value and book value differ?

A) Salvage – T(book value – salvage)

B) (Initial cost - Salvage)T – (book value – salvage)

C)   Salvage – T(salvage – (initial cost – accumulated depreciation))

D)   (Salvage – accumulated depreciation)T – (salvage – book value)

Solutions

Expert Solution

C)   Salvage – T(salvage – (initial cost – accumulated depreciation))

Salvage value is the value which will be received when the asset i ssold. Tax will be the difference between salvage value and book value at the time of sale.


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