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

question 1

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 39%, 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

---

Definitions:

Legal

Pertaining to law; relating to the system of rules that are recognized and enforced by a particular country or community.

Moral

Relating to principles of right and wrong behavior and the goodness or badness of human character.

Conservation

The principle that certain properties of objects, like volume or mass, remain the same even when their form or appearance changes, in cognitive development theory.

Quantity

The amount or number of a material or immaterial thing not requiring a unit of measure.