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Deer and Doe purchased $120,000 of equipment six years ago. The equipment is 7-year MACRS property....

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Finance

Deer and Doe purchased $120,000 of equipment six years ago. Theequipment is 7-year MACRS property. The firm is selling thisequipment today for $24,500. What is the after-tax cash flow fromthis sale if the tax rate is 35 percent?

Year                     1           2           3           4          5          6          7          8

Percent            14.29    24.49    17.49    12.49     8.93     8.93     8.93     4.45

a.

$27,455.40

b.

$25,785.40

c.

$15,925.00

d.

$21,544.60

e.

$18,209.60

Answer & Explanation Solved by verified expert
3.9 Ratings (559 Votes)
Computation of annual depreciation expense and book value of the equipment Year Initial cost of equipment C MACRS R Annual depreciation C x R    See Answer
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Transcribed Image Text

Deer and Doe purchased $120,000 of equipment six years ago. Theequipment is 7-year MACRS property. The firm is selling thisequipment today for $24,500. What is the after-tax cash flow fromthis sale if the tax rate is 35 percent?Year                     1           2           3           4          5          6          7          8Percent            14.29    24.49    17.49    12.49     8.93     8.93     8.93     4.45a.$27,455.40b.$25,785.40c.$15,925.00d.$21,544.60e.$18,209.60

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