Homework Answers
(4): Sale value = $50,000
Book value = $70,000 – (20%+32%)*70000
= 33,600
Thus capital gain = 50,000 – 33,600
= 16,400
Tax on this = 40% of 16400 = 6560
Thus cash flow from disposal = 50,000-6560
= 43,440
Thus the answer is the 3rd option i.e. $43,440
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