An asset with a book value of $160,000 is sold at a loss (before taxes are considered) of $40,000. If the applicable tax rate is 20%, the net after- tax cash effect of this transaction is a(n):

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The asset is sold for $120,000 ($160,000 - $40,000 loss). The tax benefit from the loss is $8,000 ($40,000 loss * 20% tax rate). Therefore, the net after-tax cash inflow is $128,000 ($120,000 sale price + $8,000 tax benefit).

An Asset with a Book Value of $160,000 Is Sold