Four years ago, your firm bought an asset that is being depreciated on a straight-line basis...

 

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Four years ago, your firm bought an asset that is being depreciated on a straight-line basis to zero over a 5-year life. The asset cost $175,000 and is being sold for $10,000 today. The tax rate is 35%. What is the after-tax cash flow from the sale of the asset? Problem 7 A project requires an initial investment of $60,000 and has cash inflows of $10,000 each year for 3 years. What is the profitability index if the required return is 9%? Would you accept this project? Four years ago, your firm bought an asset that is being depreciated on a straight-line basis to zero over a 5-year life. The asset cost $175,000 and is being sold for $10,000 today. The tax rate is 35%. What is the after-tax cash flow from the sale of the asset? Problem 7 A project requires an initial investment of $60,000 and has cash inflows of $10,000 each year for 3 years. What is the profitability index if the required return is 9%? Would you accept this project?

Answer rating: 100% (QA)

First lets calculate the aftertax cash flow from the sale of the asset 1 Calculate the book value of ... View the full answer