Liberty Services Is Now at the End of the Final

question 57

Multiple Choice

Liberty Services is now at the end of the final year of a project.The equipment originally cost $22,500,of which 75% has been depreciated.The firm can sell the used equipment today for $6,000,and its tax rate is 40%.What is the equipment's after-tax salvage value for use in a capital budgeting analysis? Note that if the equipment's final market value is less than its book value,the firm will receive a tax credit as a result of the sale.

• A)$5,558
• B)$5,850
• C)$6,143
• D)$6,450
• E)$6,772

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Definitions:

CISG

The United Nations Convention on Contracts for the International Sale of Goods, a set of rules governing the sale of goods between parties from different countries.

International Sales

The sale of goods or services across national boundaries, governed by international commercial law and trade agreements.

Void Contract

An agreement that is null and lacks legal effect or enforceability from its inception.

Valid Contract

An agreement between two or more parties that is enforceable by law.