Consider an Asset That Costs $176,000 and Is Depreciated Straight-Line

question 104

Multiple Choice

Consider an asset that costs $176,000 and is depreciated straight-line to zero over its 11-year tax life.The asset is to be used in a 7-year project; at the end of the project,the asset can be sold for $22,000.The relevant tax rate is 30 percent.What is the aftertax cash flow from the sale of this asset?

• A)$31,800
• B)$32,600
• C)$33,300
• D)$34,100
• E)$34,600

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