A Textile Company Invests $12 Million in an Open-End Spinning

question 41

Multiple Choice

A textile company invests $12 million in an open-end spinning machine.This was depreciated using the seven-year MACRS schedule shown above.If the company sold it immediately after the end of year 3 for $7 million,what would be the after-tax cash flow from the sale of this asset,given a tax rate of 40%?

• A)$1,300,480
• B)$1,950,720
• C)$2,076,880
• D)$5,699,520

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