Custom Cars purchased some $39,000 of fixed assets two years ago that are classified as 5-year...

Custom Cars purchased some $39,000 of fixed assets two years ago that are classified as 5-year MACRS property. The MACRS rates are 20 percent, 32 percent, 19.2 percent, 11.52 percent, 11.52 percent, and 5.76 percent for Years 1 to 6, respectively. The tax rate is 34 percent. If the assets are sold today for $19,000, what will be the aftertax cash flow from the sale?

Expert Solution

Asset cost	$ 39,000.00
Less: Depreciation charged	$ 20,280.00	39000*(20%+32%)
WDV of machine at the time of sale	$ 18,720.00
Sale value of machine	$ 19,000.00
Profit/(Loss) on sale	$ 280.00
Less: Tax @34%	$ 95.20
After tax cash flows from sale of asset	$ 18,904.80

jeff jeffy answered 2 years ago

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