Liberty Services Is Now at the End of the Final

question 57

Multiple Choice

Liberty Services is now at the end of the final year of a project.The equipment originally cost $22,500,of which 75% has been depreciated.The firm can sell the used equipment today for $6,000,and its tax rate is 40%.What is the equipment's after-tax salvage value for use in a capital budgeting analysis? Note that if the equipment's final market value is less than its book value,the firm will receive a tax credit as a result of the sale.

• A)$5,558
• B)$5,850
• C)$6,143
• D)$6,450
• E)$6,772

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