Consider an Asset That Costs $459,000 and Is Depreciated Straight-Line

question 61

Multiple Choice

Consider an asset that costs $459,000 and is depreciated straight-line to zero over its 6-year tax life. The asset is to be used in a 4-year project; at the end of the project, the asset can be sold for $120,000. If the relevant tax rate is 34 percent, what is the aftertax cash flow from the sale of this asset?

• A) $131,220
• B) $127,840
• C) $116,500
• D) $97,600
• E) $79,200

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