Manzana Inc. is buying a piece of equipment. The equipment costs $3,000,000. The equipment is considered for tax purposes as a 5-year MACRS class. If the equipment is sold at the end of 4 years for $200,000, what is the after-tax cash flow from the sale of this asset (after-tax net salvage value or termination value of the equipment)? The marginal tax rate is 20 percent.

The annual expense percentage for a 5-year MACRS property from year 1 to 6 respectively are: 20.00%; 32.00%; 19.20%; 11.52%; 11.52: and 5.76%.

Answer rating: 100% (QA)

To calculate the aftertax cash flow from the sale of the asset you need to consider the following st... View the full answer