A textile company invests $10 million in an open-end spinning machine. This was depreciated using the seven-year MACRS schedule shown above. If the company sold it immediately after the end of year 3 for $7 million, what would be the after-tax cash flow from the sale of this asset, given a tax rate of 40%?
A) $1,550,400
B) $3,124,000
C) $3,876,000
D) $5,449,600

Question

A textile company invests $10 million in an open-end spinning machine. This was depreciated using the seven-year MACRS schedule shown above. If the company sold it immediately after the end of year 3 for $7 million, what would be the after-tax cash flow from the sale of this asset, given a tax rate of 40%?
A) $1,550,400 
B) $3,124,000 
C) $3,876,000 
D) $5,449,600

Quizplus · Accepted Answer

D) 11ea84dc_f549_fe8e_9a63_2baa14407c53_TB1316_00_TB1316_00 11ea84dc_f549_fe8f_9a63_213e1bc0ca2e_TB1316_00_TB1316_00 11ea84dc_f549_fe90_9a63_fd82ec07c251_TB1316_00_TB1316_00 11ea84dc_f549_fe91_9a63_c30056cdbbed_TB1316_00_TB1316_00

A Textile Company Invests $10 Million in an Open-End Spinning