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A textile company invests $12 million in an open-end spinning machine. This was depreciated using ...

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A textile company invests $12 million in an open-end spinning machine. This was depreciated using ...

Year 0

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

MACRS

Depreciation Rate

14.29%

24.49%

17.49%

12.49%

8.93%

8.92%

8.93%

4.46%

A textile company invests $12 million in an open-end spinning machine. This was depreciated using the seven-year MACRS schedule shown above. If the company sold it immediately after the end of year 3 for $7 million, what would be the after-tax cash flow from the sale of this asset, given a tax rate of 40%?

▸ $5,699,520

▸ $1,300,480

▸ $1,950,720

▸ $2,076,880

Textbook

Fundamentals of Corporate Finance

Edition: 2^nd

Authors: Berk, DeMarzo, Harford

Read 98 times

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Jlynn

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More solutions for this book are available here

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david f. Author

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4 years ago

Exactly what I needed for my project, TYSM

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