A firm is considering the purchase of equipment costing$250,000. Assume the equipment is depreciated straight-line over a5-year useful life. The firm estimates the equipment will generate$88,000 in yearly incremental after-tax cash flows for 4years. At the end of the project, the equipment will be sold for$75,000. If the tax rate is 20%, what is the after-tax cash flowgenerated from the sale of the equipment (in year 4).
Multiple Choice
$75,000
$70,000
$50,000
$60,000
A firm is considering the purchase of equipment costing $250,000. Assume the equipment is depreciated straight-line over
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