Written down value after 4 years = 94,000*(100-14.29-24.49-17.49-12.49)%
= $29,365.6
a.Selling price = $36,000
Gain on Sale = $6,634.4
Tax = $2,322.04
After tax cash flow = 36,000 – 2,322.04
= $33,677.96
b.Price = $29,365.60
Gain on Sale = 0
Tax = 0
After tax cash flow = $29,365.60
c.Selling price = $20,000
Loss on Sale = $9,365.5
Tax savings = $3,277.96
After tax cash flow = $23,277.96
6. Cost recovery. Richardses' Tree Farm, Inc. purchased a new aerial tree trimmer for $94,000. It...
Cost recovery. Richardses' Tree Farm, Inc. purchased a new aerial tree trimmer for $94,000. It is classified in the property class category of a single-purpose agricultural and horticultural structure. Then the company sold the tree trimmer after four years of service. If a seven-year life and MACRS, , was used for the depreciation schedule, what is the after-tax cash flow from the sale of the trimmer (use a 40%tax rate) if a. the sales price was $30,000? b. the...
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