Use the table below to answer this question. Ronnie\'s Custom Cars purchased som

Question

Use the table below to answer this question.

Ronnie's Custom Cars purchased some fixed assets two years ago for $125,000. The assets are classified as 5-year property for MACRS. Ronnie is considering selling these assets now so he can buy some newer fixed assets which utilize the latest in technology. Ronnie has been offered $64,500 for his old assets. What is the net cash flow from the salvage value if the tax rate is 34 percent?

$60,000.00

$54,810.00

$49,914.00

$62,970.00

$64,500.00

Use the table below to answer this question.

Explanation / Answer

Asset costs $ 125,000.00 Less: Depreciatioon charged $    65,000.00 WDV of machine at project ending $    60,000.00 Sale value of machine $    64,500.00 Profit on sale $      4,500.00 Less: Tax on sale@34% $      1,530.00 After tax cash flows from sale of asset $    62,970.00

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