Calculate After-Tax Cash Flow at disposal.

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Genetic Insights Co. purchases an asset for $14,084. This asset qualifies as a seven-year recovery asset under MACRS. The seven-year fixed depreciation percentages for years 1, 2, 3, 4, 5, and 6 are 14.29%, 24.49%, 17.49%, 12.49%, 8.93%, and 8.93%, respectively. Genetic Insights has a tax rate of 30%. The asset is sold at the end of six years for $4,234.

Calculate After-Tax Cash Flow at disposal. Round the answer to two decimals.

Oct 4th, 2015

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Cost of Machine $14,084.00
Year Depreciation % Accumulated Depreciation
1 14.29% $2,012.60
2 24.49% $3,449.17
3 17.49% $2,463.29
4 12.49% $1,759.09
5 8.93% $1,257.70
6 8.93% $1,257.70
$12,199.56
Cost of machine $14,084.00
less: accumulated Depreciation -$12,199.56
Book Value of machine at end 6 th year $1,884.44
Machine sold $4,234.00
Book Value of machine at end 6 th year -$1,884.44
Profit on sale $2,349.56
Less Tax @30% $704.87
Cash flow after tax
Machine sold $4,234.00
Less Tax @30% -$704.87
After-Tax Cash Flow at disposal $3,529.13
After-Tax Cash Flow at disposal.xlsx

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Oct 4th, 2015

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