The Tax Effect of a Sale of an Asset at a Gain

question 51

True/False

The tax effect of a sale of an asset at a gain increases the cash flow from the sale.

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Definitions:

Pretax Cost of Debt

The rate of interest a company pays on its borrowings before tax adjustments, often used in calculating the cost of capital for a company.

Retained Earnings

Profits that a company has kept or retained rather than paid out as dividends.

Cost Estimate

An approximation of the costs associated with completing a project, task, or transaction, often used in budgeting and planning.

WACC

Weighted Average Cost of Capital, the average rate of return a company is expected to pay its security holders to finance its assets.