XYZ Corporation Is Contemplating the Replacement of an Existing Asset

question 3

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 an income tax rate of 34%.What is the projected after-tax cash flow associated with the sale of the existing asset?

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

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Definitions:

Diagram

A simplified drawing or plan that represents ideas, structures, or systems, typically with labels and annotations.

Aquifer

An underground layer of water-bearing permeable rock or materials through which water can move and be stored.

Dry Period

An extended timespan with significantly reduced or no precipitation, leading to drought conditions and water scarcity.

Water Waste

The loss or misuse of water resources, often due to inefficient practices, leakage, or contamination.