Kustom Cars purchased a fixed asset 2 years ago for $47,000 and sold it today for $23,000.The assets are classified as 5-year property for MACRS.The MACRS table values are 0.2000,0.3200,0.1920,0.1152,0.1152,and 0.0576 for Years 1 to 6,respectively.What is the net cash flow from the sale if the tax rate is 34 percent?

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Quizplus · Accepted Answer

Book value_Year ₂ = $47,000 × (1 - 0.2 - 0.32)= $22,560 Aftertax salvage value = $23,000 - 0.34($23,000 - $22,560)= $22,850.40

Kustom Cars Purchased a Fixed Asset 2 Years Ago for $47,000