Suppose you sell a fixed asset for $128,000 when its book value is $148,000. If your...

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Suppose you sell a fixed asset for $128,000 when its book value is $148,000. If your...

Suppose you sell a fixed asset for $128,000 when its book value is $148,000. If your company’s marginal tax rate is 21 percent, what will be the effect on cash flows of this sale (i.e., what will be the after-tax cash flow of this sale)?

ATCF

business finance

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Answer 1

Answer #1

Loss on sale=148,000-128,000=$20,000

Hence aftertax cash flow=Sale proceeds+(Loss on sale*Tax rate)

=128,000+(20,000*21%)

=$132200

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Answer 2

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