##### Calculate After-Tax Cash Flow at disposal.

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Reversing Rapids Co. purchases an asset for \$177,690. This asset qualifies as a five-year recovery asset under MACRS. The five-year expense percentages for years 1, 2, 3, and 4 are 20.00%, 32.00%, 19.20%, and 11.52% respectively. Reversing Rapids has a tax rate of 30%. The asset is sold at the end of year 4 for \$14,214.

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

Oct 5th, 2015

 Year Depreciation % Accumulated Depreciation 0 20% \$35,538.00 1 32% \$56,860.80 2 19.20% \$34,116.48 3 11.52% \$20,469.89 4 \$146,985.17 Cost of machine \$177,690.00 less: accumulated Depreciation \$146,985.17 Book Value of machine at end 6 th year \$324,675.17 Machine sold \$14,214.00 Book Value of machine at end 6 th year -\$324,675.17 loss on sale -\$310,461.17 Tax shield of  loss on sale  @30% -\$93,138.35 Cash flow after tax Machine sold \$14,214.00 add Tax shield @30% \$93,138.35 After-Tax Cash Flow at disposal \$107,352.35
Reversing Rapids Co.xlsx

Oct 6th, 2015

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Oct 5th, 2015
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Oct 5th, 2015
May 26th, 2017
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