Exercise #4: Quick Computing installed its previous generation of computer chip manufacturing equipment 3 years ago. Some of that older equipment will become unnecessary when the company goes into the production of its new product. The obsolete equipment, which originally cost $42.5 million, has been depreciated straight-line over an assumed tax life of 5 years, but it can be sold now for $18.5 million. The firms tax rate is 30%. What is the after-tax cash flow from the sale of the equipment?

9.Depreciation per year = 10.Book Value of Old Equipment =

11.After-tax Cash Flow =

= $ .........[9]............. = $ ............[10]............

= $ ............[11]............

please show your work