Cost recovery. Richardses' Tree Farm, Inc. purchased a new aerial tree trimmer for $87,000. 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, . was used for the depreciation schedule, what is the after-tax cash flow from the sale of the trimmer (use a 40% tax rate) if a. the sales price was $30,000? b. the sales price was $27,178.80? c. the sales price was $22,000? 1 Data Table MACRS Fixed Annual Expense Percentages by Recovery Class Click on this icon e to download the data from this table Year 3-Year 5-Year 7-Year 10-Year 1 33.33% 20.00% 14.29% 10.00% 44.45% 32.00% 24.49% 18.00% 3 14.81% 19.20% 17.49% 14.40% 4 7.41% 11.52% 12.49% 11.52% 11.52% 8.93% 9.22% 6 5.76% 8.93% 7.37% 7 8.93% 6.55% 8 4.45% 6.55% 6.55% 10 6.55% 11 3.28%

Cost recovery. Richardses' Tree Farm, Inc. purchased a new aerial tree trimmer for $87,000. 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, . was used for the depreciation schedule, what is the after-tax cash flow from the sale of the trimmer (use a 40% tax rate) if a. the sales price was $30,000? b. the sales price was $27,178.80? c. the sales price was $22,000? 1 Data Table MACRS Fixed Annual Expense Percentages by Recovery Class Click on this icon e to download the data from this table Year 3-Year 5-Year 7-Year 10-Year 1 33.33% 20.00% 14.29% 10.00% 44.45% 32.00% 24.49% 18.00% 3 14.81% 19.20% 17.49% 14.40% 4 7.41% 11.52% 12.49% 11.52% 11.52% 8.93% 9.22% 6 5.76% 8.93% 7.37% 7 8.93% 6.55% 8 4.45% 6.55% 6.55% 10 6.55% 11 3.28%

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter10: Project Cash Flows And Risk

Section: Chapter Questions

Problem 4PROB

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