Kennedy Airlines is now in the final year of a project. The equipment originally cost $10...

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Kennedy Airlines is now in the final year of a project. The equipment originally cost $10...

Kennedy Airlines is now in the final year of a project. The equipment originally cost $10 million, of which 100 percent has been depreciated. Kennedy can sell the used equipment today for $1.3 million, and its tax rate is 20 percent. What is the equipment’s after-tax net salvage value?

	a.	$260,000
	b.	$3,040,000
	c.	$1,040,000
	d.	$1,560,000
	e.	$900,000

business finance

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Answer 1

Answer #1

Book Value is zero ,since the asset has been depreciated fully.

The asset could be realized at a value of $ 1.3 Million and gains on the asset disposal would attract taxes.

The after-tax net salvage value = $ 1.3 Million *(1-20%)

= 1,040,000

Answer : c. $ 1,040,000

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Answer 2

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