Calculating Salvage Value Consider an asset that costs $468,000 and is depreciated straight-line to zero over its

Question:

Calculating Salvage Value Consider an asset that costs $468,000 and is depreciated straight-line to zero over its eight-year tax life. The asset is to be used in a five-year project; at the end of the project, the asset can be sold for $72,000. If the relevant tax rate is 35 percent, what is the after tax cash flow from the sale of this asset?

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...