A Financial Analyst Calculated That the After-Tax Salvage Value for a Machine

question 55

Multiple Choice

A financial analyst calculated that the after-tax salvage value for a machine was $10,200. The current book value of the asset is $25,000 and the firm's tax rate is 20 percent. How much could the machine be sold for today?

• A) $6,500
• B) $7,500
• C) $11,500
• D) $9,500

---

Definitions:

Financing Activities

transactions that result in changes in the size and composition of the equity capital and borrowings of the entity, as reported in the cash flow statement.

Net Income

The net income a firm retains after deducting all operational expenses and taxes from its gross revenue.

Net Cash

The amount of cash available after adjusting for cash inflows and outflows over a given period.

Financing Activities

Transactions and events that involve raising funds for the company and repaying funds to investors, such as issuing stock or borrowing.