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 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?

Depreciation per year = = $ [9].

Book Value of Old Equipment = = $ [10]

After-tax Cash Flow = = $ [11]