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) 11eaabab_c098_10eb_b90e_152894b09aae_TB5536_11 11eaabab_c098_10ec_b90e_4b7b75be5da7_TB5536_11 11eaabab_c098_10ed_b90e_5b89172d96b9_TB5536_11 11eaabab_c098_10ee_b90e_bddb4658c3e4_TB5536_11

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