Suppose You Sell a Fixed Asset for $90,000 When Its

question 58

Multiple Choice

Suppose you sell a fixed asset for $90,000 when its book value is $95,000. If your company's marginal tax rate is 40%, 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) $3,000
• B) $5,000
• C) $92,000
• D) $95,000

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Definitions:

Budgeting

The process of creating a plan to spend your resources, outlining an organization's financial and operational goals.

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A financial plan that estimates revenue and expenses over a specific period in the future, guiding managerial decisions and actions.