Suppose you sell a fixed asset for $62,218 when its book value is $51,187. If your...

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Suppose you sell a fixed asset for $62,218 when its book value is $51,187. If your...

Suppose you sell a fixed asset for $62,218 when its book value is $51,187. If your company's marginal tax rate is 25 percent, what will be the after-tax cash flow of this sale?

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Answer 1

Answer #1

After-tax cash flow of this sale = Book value + (Market value - Book value) × (1 - T_C)

After-tax cash flow of this sale = $51,187 + ($62,218 - $51,187) × (1 - 0.25)

After-tax cash flow of this sale = $59,460.25

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Answer 2

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