Question: PowerBuilt Construction is considering whether to replace an existing bulldozer with a new model. If the new bulldozer is purchased, the existing bulldozer will be

PowerBuilt Construction is considering whether to replace an existing bulldozer with a new model. If the new bulldozer is purchased, the existing bulldozer will be sold to another company for $85,000. The existing bulldozer has a book value equal to $100,000.

What will be the net after-tax cash fl ow that is generated from the disposal of the existing bulldozer? PowerBuilt’s marginal tax rate is 35 percent.

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