Suppose You Sell a Fixed Asset for $112,000 When Its

question 58

Multiple Choice

Suppose you sell a fixed asset for $112,000 when its book value is $112,000. If your company's marginal tax rate is 21 percent, what will be the effect on cash flows of this sale (i.e., what will be the after-tax cash flow of this sale) ?

• A) $0
• B) $68,320
• C) $112,000
• D) $34,720

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Definitions:

Primarily Liable

Being the first or main party responsible for fulfilling a financial or legal obligation.

Fraud in the Factum

Refers to a specific type of fraud where a person is deceived into signing a document not knowing its true nature or essence.

Negotiable Instrument

A written promise or order to pay a fixed amount of money, easily transferable from one party to another.

Promissory Note

A written promise to pay a specified sum of money to a certain individual or entity under agreed-upon terms.