A Machine Is Purchased for $575,000 and Is Used Through

question 38

Multiple Choice

A machine is purchased for $575,000 and is used through the end of Year 2. The machine will be depreciated using the 3-Year MACRS schedule. At the end of Year 2, the machine is sold for $75,000. What is the after-tax cash flow from the sale of the machine at the end of Year 2 if the firm's marginal tax rate is 35%?

• A)$42,608
• B)$15,916
• C)$32,392
• D)$63,663

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Definitions:

Left Tailed

Refers to a type of hypothesis test where the area of interest, or region of rejection, is located in the left tail of the distribution.

Test-Statistic

A quantity derived from sample data used in a hypothesis test to make a decision about the population parameter.

Right Tailed

Pertaining to a type of hypothesis test where the area of interest is in the right tail of the distribution, typically testing for values greater than a certain number.

Test-Statistic

A value calculated from sample data during hypothesis testing used to determine whether to reject the null hypothesis.