Which one of the following is the correct method for computing the net cash flow on the sale of a piece of equipment? (Assume that the equipment was the only asset in its CCA pool.)

Question

Quizplus · Accepted Answer

The net cash flow on the sale of a piece of equipment is calculated as the selling price minus the book value, multiplied by (1 - Tc), where Tc is the corporate tax rate. This is because the gain on the sale of the equipment is taxable, and the tax savings from the depreciation deduction on the equipment will be lost.

Which One of the Following Is the Correct Method for Computing