A firm has a general-purpose machine, which has a book value of $300,000 and is worth $500,000 in the market. If the tax rate is 21%, what is the after-tax cash flow from selling this machine

Respuesta :

$458,000 is the after-tax cash flow from selling this machine.

1 WDV of the machine at the                  

time of use:                                                 $300,000

2 Sale value of machine                            $500,000

3 Profit/(Loss) on sale                                $200,000

4 Less: Tax on sale  21%                         $42,000

5 The opportunity cost of use is               $458,000

Core paper. A company is a for-profit enterprise, usually incorporated as a partnership, providing professional services such as legal and accounting services. The corporate theory assumes that companies exist to maximize profits.

The term cash flow refers to the net amount of cash and cash equivalents entering and exiting a business. Money received represents inflows and money spent represents outflows.

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