Suppose you sell a fixed asset for $109,000 when its book value is $129,000. If your company’s marginal tax rate is 39 percent, what will be the effect on cash flows of this sale (i.e., what will be the after-tax cash flow of this sale)?
Answer to relevant QuestionsYour company is considering a new project that will require $1 million of new equipment at the start of the project. The equipment will have a depreciable life of 10 years and will be depreciated to a book value of $150,000 ...Your firm needs a computerized machine tool lathe which costs $50,000, and requires $12,000 in maintenance for each year of its three-year life. Is the set of cash flows depicted in the following table normal or non-normal? Explain.Compute the discounted payback statistic for Project C and recommend whether the firm should accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 8 percent and the maximum ...Use the payback decision rule to evaluate this project; should it be accepted orrejected?
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