Annual depreciation=(Cost-Salvage value)/Useful Life
=(710,000/10)=$71,000/year
Hence book value as on date of sale=Cost-Accumulated depreciation
=710,000-(71,000*6)=$284,000
Hence loss on sale=(284,000-195,000)=$89,000
Hence aftertax cash flow=Sale proceeds+(loss on sale*Tax rate)
=195,000+(0.25*89,000)
=$217250.
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