XYZ Corporation Is Contemplating the Replacement of an Existing Asset

question 134

Multiple Choice

XYZ Corporation is contemplating the replacement of an existing asset used in the operation of its business. The original cost of this asset was $28,000; since date of acquisition, the company has taken a total of $20,000 of depreciation expense on this asset. The current disposal (market) value of this asset is estimated as $18,000. XYZ is subject to a combined income tax rate, t, of 34%. What is the projected after-tax cash flow associated with the sale of the existing asset, rounded to nearest hundred dollars?

• A) $18,000.
• B) $10,000.
• C) $14,600.
• D) $8,000.
• E) $11,400.

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Definitions:

Column Break

A feature in word processing applications that creates a break in the text, forcing the following text to start at the top of the next column.

Ruler

A tool in software applications that helps measure and align objects within documents or graphical projects.

Width Text Box

A graphical user interface element allowing users to input or view text, specifically designed to adjust or display the width measurement.

Right Mouse Button

The button on the right side of a mouse, typically used to open contextual menus or perform secondary actions.