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Cost recovery. ​ Richardses' Tree​ Farm, Inc. purchased a new aerial tree trimmer for ​$. It is classified in the property class category of a​ single-purpose agricultural and horticultural structure. Then the company sold the tree trimmer after four years of service. If a​ seven-year life and​ MACRS, LOADING...​, was used for the depreciation​ schedule, what is the​ after-tax cash flow from the sale of the trimmer​ (use a ​% tax​ rate) if a. the sales price was ​$​? b. the sales price was ​$​? c. the sales price was ​$​? a. If the sales price is ​$​, what is the​ after-tax cash​ flow?

Respuesta :

jepessoa

Answer:

after tax cash flow = $29,512.32

Explanation:

the numbers are missing in this question:

purchase cost = $82,000

tax rate = 40%

selling price at end of year 4 = $32,000

MACRS 7 year depreciation schedule:

year             %            depreciation expense         carrying value

1                  14.29%           $11,717.80                          $70,282.20

2                 24.29%          $19,917.80                        $50,364.40

3                 17.49%           $14,341.80                         $36,022.60

4                 12.49%           $10,241.80                        $25,780.80

after tax cash flow = $32,000 - [($32,000 - $25,780.80) x 40%] = $32,000 - $2,487.68 = $29,512.32

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