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Pet Supply purchased some fixed assets two years ago at a cost of $43,800. It no longer needs these assets so it is going to sell them today for $32,500. The assets are classified as five-year property for MACRS. The MACRS rates are 20%, 32% 19.2%, 11.52%, 11.52%, 5.76%, for years 1 to 6, respectively. What is the net cash flow (A-T Salvage Value) from this sale if the firm's tax rate is 35 percent

Respuesta :

Answer:

$28,483.4

Explanation:

The computation of the net cash flow is shown below;

Asset cost       $43,800

MACRS Rate 0.2 0.32

                     8760 14016

So total depreciation is

= $8,760 + $14,016

= $22,776

Now  

Book Value of the company is

= oriignal value - depreication

= $43,800 - $22,776

= $21,024

And,  

Sale price = 32500

So,  

Gain is

= $32,500 - $21,024

= $11,476

So,  

Tax = 0.35% of 11476

= $4,016

And, finally  

Net cashflows is

= Sale price - tax

= $28,483.4

Cricetus

Answer:

The correct solution is "28483".

Explanation:

According to the question,

Given:

Sales price,

= 32500

MARCS rates,

= [tex]43800\times 0.2[/tex]

= [tex]8760[/tex]

Or,

= [tex]43800\times 0.32[/tex]

= [tex]14016[/tex]

Now,

The total depreciation will be:

= [tex]8760+14016[/tex]

= [tex]22776[/tex]

The company's book value will be:

= [tex]Original \ value-Depreciation[/tex]

= [tex]43800-22776[/tex]

= [tex]21024[/tex]

Gain will be:

= [tex]32500-21024[/tex]

= [tex]11476[/tex]

Tax,

= [tex]35\times 11476[/tex]

= [tex]4016[/tex]

hence,

The net cashflows will be:

= [tex]Sale \ price-Tax[/tex]

= [tex]32500-4016[/tex]

= [tex]28483[/tex]