70.2K

Verified Solution

Link Copied!

A. Your company is considering investing in a new asset. The old asset, which has a book value of $100,000, can be sold for $100,000. The purchase price of the old asset was $500,000. What are the tax effects of the sale of the old asset?

B. Use the information below and from Problem 2 to find the net cash outlay for this project. Cost of New Asset $385,500 Installation Costs $0 Decrease in Working Capital $6,000

PROBLEM A
Old Asset
Book Value
Proceeds on Sale
Initial Purchase Price
Outputs
Cash Distribution Table	Distribution	Tax Effects
Book Value
Capital Gain
Capital Loss
Recaptured Depreciation
Proceeds on Sale
PROBLEM B
Inputs
Cost of New Asset
Installation Costs
Old Asset
Book Value
Proceeds on Sale
Initial Purchase Price
Decrease in Working Capital
Outputs
Cash Distribution Table	Distribution	Tax Effects
Book Value
Capital Gain
Capital Loss
Recaptured Depreciation
Proceeds on Sale
Cost of New Asset
Installation Costs
Proceeds on Sale,Old Asset
Taxes on Proceeds on Sale
Decrease in Working Capital
Net Cash Outlay

Answer & Explanation Solved by verified expert

See Answer