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6. Cost recovery. Richardses Tree Farm, Inc. purchased a new aerial tree trimmer for $94,000. It is classified in the proper
(Round to the nearest cent.) c. If the sales price is $20,000, what is the after-tax cash flow? (Round to the nearest cent.)
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Answer #1

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

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