Golden overseas shipping purchased a new truck two years ago for $129,500. The c
ID: 2613610 • Letter: G
Question
Golden overseas shipping purchased a new truck two years ago for $129,500. The company uses MACRS depreciation for accounting purposes. The truck is classified as 5-year property, which has depreciation allowances of 20%, 32%, and 19.2% for the first three years, respectively. The company is in the 34% marginal tax bracket. Today the company received an offer of $74,900 for the truck. What will be the net cash flow from the sale if the company decides to sell the truck today?
$24,615
$50,285
$70,568
$66,492
$62,160
Explanation / Answer
The answer is opetion A 24615
Total depreciation for 3 years is close to 92,204
Balance value of truck = 37,296
Offer price = 74,900
Total cash inflow = 74,900 - 37,296 = 37,404
after tax = $ 24,615
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