Southwest Co

question 14

Essay

Southwest Co.purchases an asset for $60,000.This asset qualifies as a seven-year recovery asset under MACRS.Winston has a tax rate of 30%.The seven-year fixed depreciation percentages for years 1,2,3,4,5,and 6 are 14.29%,24.49%,17.49%,12.49%,8.93%,and 8.93%,respectively.If the asset is sold at the end of six years for $10,000,what is the cash flow from disposal?

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