Poon's Noodle House Is Considering Replacing Their Noodle-Processing Machine

question 17

Multiple Choice

Poon's Noodle House is considering replacing their noodle-processing machine. The current machine was purchased 4 years ago at a total cost of $20,000. It is being depreciated straight-line to a zero value over 8 years. If Poon sells the noodle-processing machine for $13,000, what is the after-tax cash flow to Poon's Noodle House? Use 40% for the effective tax rate.

• A)$11,800
• B)$7,800
• C)$11,200
• D)$5,200

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