Question
In: Accounting
You purchased a machine for $ 1.00$1.00 million three years ago and have been applying straight-line...
You purchased a machine for
$ 1.00$1.00
million three years ago and have been applying straight-line depreciation to zero for a seven-year life. Your tax rate is
25 %25%.
If you sell the machine today (after three years of depreciation) for
$ 700 comma 000$700,000,
what is your incremental cash flow from selling the machine?
2.
The Jones Company has just completed the third year of a five-year MACRS recovery period for a piece of equipment it originally purchased for
$ 305 comma 000$305,000.
a. What is the book value of the equipment?
b. If Jones sells the equipment today for
$ 183 comma 000$183,000
and its tax rate is
35 %35%,
what is the after-tax cash flow from selling it?
Note:
Assume that the equipment is put into use in year 1.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
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