Eight years ago, a company purchased an injection molding machine at $40,000. It has been depreciated according to conventional straight-line method (book depreciation) over a 12-year service life. The estimated salvage value at the end of 12 years (from the purchase) was $4,000. This estimate is still good. The machine has a current market value of $15,000. If the machine is sold on the market, what would be the net proceeds (net salvage value after tax) from the sale? The firm's income tax rate is 40%. Any gains (or losses) will be taxed (or credited) at 40%.
Eight years ago, a company purchased an injection molding machine at $40,000. It has been depreciated according to conventional straight-line method (book depreciation) over a 12-year service life. The estimated salvage value at the end of 12 years (from the purchase) was $4,000. This estimate is still good. The machine has a current market value of $15,000. If the machine is sold on the market, what would be the net proceeds (net salvage value after tax) from the sale? The firm's income tax rate is 40%. Any gains (or losses) will be taxed (or credited) at 40%.
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter12: Capital Budgeting: Decision Criteria
Section: Chapter Questions
Problem 22P: The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500,...
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Eight years ago, a company purchased an injection molding machine at $40,000. It has been
salvage value after tax) from the sale? The firm's income tax rate is 40%. Any gains (or losses) will be taxed (or credited) at 40%.
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