Suppose You Sell a Fixed Asset for $10,000 When Its

question 107

Multiple Choice

Suppose you sell a fixed asset for $10,000 when its book value is $2,000. 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) $3,680
• B) $8,320
• C) $420
• D) $6,500

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Definitions:

Hypervigilance

An enhanced state of sensory sensitivity accompanied by an exaggerated intensity of behaviors whose purpose is to detect threats.

Dissociation

A mental process that causes a lack of connection in a person's thoughts, memory, and sense of identity.

Anhedonia

A lack of ability to find joy in activities usually considered pleasurable.

Adrenocorticotropic Hormone

A hormone produced by the pituitary gland that stimulates the adrenal glands to release cortisol, a stress response hormone.