Suppose You Sell a Fixed Asset for $99,000 When Its

question 74

Multiple Choice

Suppose you sell a fixed asset for $99,000 when its book value is $129,000. If your company's marginal tax rate is 39 percent, 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)$80,700
• B)$110,700
• C)$77,300
• D)$84,800

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Definitions:

Pollution

The contamination of the natural environment with harmful substances or energy, leading to adverse effects on living organisms and ecosystems.

Externality

An economic side effect or consequence of an industrial or commercial activity that affects other parties without this being reflected in market prices, either positively or negatively.

Steel Industry

A sector of the economy that deals with the production, distribution, and consumption of steel products.

External Costs

External costs refer to the expenses that are not directly accounted for in the purchase price of a product or service, often involving environmental or societal impacts.