Saturday 27 October 2012

Suppose Speedy Inc. sells a piece of equipment it owns today for $25,000. This equipment has been fully depreciated, using MACRS rules and had an original cost of $81,000. The company’s tax rate is 35%. What is the after-tax cash inflow to the firm from the disposal of this asset? Answer a. $16,250 b. $39,750 c. $8,750 d. $56,000

Suppose Speedy Inc. sells a piece of equipment it owns today for $25,000. This equipment has been fully depreciated, using MACRS rules and had an original cost of $81,000. The company’s tax rate is 35%. What is the after-tax cash inflow to the firm from the disposal of this asset?
Answer
a. $16,250
b. $39,750
c. $8,750
d. $56,000


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