question archive Custom Cars purchased some $39,000 of fixed assets two years ago that are classified as 5-year MACRS property
Custom Cars purchased some $39,000 of fixed assets two years ago that are classified as 5-year MACRS property
Subject:FinancePrice:2.87 Bought7
Custom Cars purchased some $39,000 of fixed assets two years ago that are classified as 5-year MACRS property. The MACRS rates are 20 percent, 32 percent, 19.2 percent, 11.52 percent, 11.52 percent, and 5.76 percent for Years 1 to 6, respectively. The tax rate is 34 percent. If the assets are sold today for $19,000, what will be the aftertax cash flow from the sale?
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ANSWER:
| Asset cost | $ 39,000.00 | |
| Less: Depreciation charged | $ 20,280.00 | 39000*(20%+32%) |
| WDV of machine at the time of sale | $ 18,720.00 | |
| Sale value of machine | $ 19,000.00 | |
| Profit/(Loss) on sale | $ 280.00 | |
| Less: Tax @34% | $ 95.20 | |
| After tax cash flows from sale of asset | $ 18,904.80 |
