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

question 44

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 $12,000 and the firm's tax rate is 21 percent. How much could the machine be sold for today?

• A) $6,953.07
• B) $7,151.63
• C) $9,721.52
• D) $9,103.49

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Definitions:

Outside Supplier

A third-party entity that provides goods or services to a company, typically not affiliated with the company's internal supply chain.

Fixed Manufacturing Overhead

The portion of manufacturing overhead costs that remains constant regardless of the level of production or output volume.

Variable Cost

Costs that vary directly with the level of production or sales volume, such as materials and labor directly involved in manufacturing.

Annual Wheel Needs

The total requirement for wheels within a one-year period, usually in the context of manufacturing or automotive maintenance.