A firm is considering the purchase of equipment costing $250,000. Assume the equipment is depreciated straight-line over
Posted: Fri Jul 01, 2022 7:48 am
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 4 years. Atthe end of the project, the equipment will be sold for $75,000. Ifthe tax rate is 20%, what is the after-tax cash flow generated fromthe sale of the equipment (in year 4). Multiple Choice $50,000$70,000 $60,000 $75,000