Suppose You Sell a Fixed Asset for $90,000 When Its

question 108

Multiple Choice

Suppose you sell a fixed asset for $90,000 when its book value is $95,000. If your company's marginal tax rate is 40 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)$3,000
• B)$5,000
• C)$92,000
• D)$95,000

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Definitions:

Disaffirm

To disaffirm means to officially reject, deny, or renounce a contract or agreement, especially by a minor or someone not fully competent.

Disaffirm

The legal act of renouncing or rejecting a contract or agreement, particularly one entered into by a minor.

Tort Theory

A framework within civil law that addresses and provides remedies for civil wrongs not arising from contractual obligations, where one party's negligence or intentional act causes harm to another.

Disaffirmance

The legal act of renouncing or voiding a contract or agreement, particularly used in cases where one party is a minor or where there has been fraud or mistake.