The sale of an asset creates an aftertax cash flow in an amount equal to the

Question

Quizplus · Accepted Answer

The aftertax cash flow from the sale of an asset is calculated as the sale price minus the taxes paid on any gain. The taxes paid on the gain are calculated as the tax rate multiplied by the difference between the sale price and the book value. Therefore, the correct formula is: Sale price - Tax rate × (Sale price - Book value). Choice C is the only option that accurately reflects this formula.

The Sale of an Asset Creates an Aftertax Cash Flow