AFTER TAX SALVAGE VALUE Karsted Air Services is now in the final year of a project....

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AFTER TAX SALVAGE VALUE Karsted Air Services is now in the final year of a project. The equipment originally cost $$29 millio

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Answer 1

Answer #1

Book value as on date of sale=Cost-Accumulated Depreciation

=29*(1-0.9)=$2.9 million

Hence gain on sale=(7.25-2.9)=$4.35 million

Hence after-tax salvage value=Sale proceeds-(gain on sale*Tax rate)

=7.25-(0.35*4.35) million

=$5,727,500

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Answer 2

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