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Linda_us, Finance, Accounts & Homework Tutor
Category: Homework
Satisfied Customers: 7290
Experience:  Post Graduate Diploma in Management (MBA)
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# Suppose you sell a fixed asset for \$115,000 when its book value

### Resolved Question:

Suppose you sell a fixed asset for \$115,000 when its book value is \$135,000. If your company’s marginal tax rate is 39 percent, what will be the effect on cash flows of this sale (i.e., what will be the after-tax cash flow of this sale)?
Submitted: 2 years ago.
Category: Homework
Expert:  Linda_us replied 2 years ago.
Welcome and Thanks for using this service.

I am Linda and I will try my best to help you with your question today.

Here is your solution

Loss on Sale = 135000-115000= 20000

Tax Benefit due to loss = 20000*39% = 7800

Effect on Cash flow = 115000+7800 = \$122800

You can request me in future by writing "FOR LINDA" at start of your post.
Customer: replied 2 years ago.

KADS, Inc., has spent \$390,000 on research to develop a new computer game. The firm is planning to spend \$190,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total \$49,000. The machine has an expected life of three years, a \$74,000 estimated resale value, and falls under the MACRS 7-year class life. Revenue from the new game is expected to be \$590,000 per year, with costs of \$240,000 per year. The firm has a tax rate of 40 percent, an opportunity cost of capital of 13 percent, and it expects net working capital to increase by \$95,000 at the beginning of the project.

 What will the cash flows for this project be? (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.)
Expert:  Linda_us replied 2 years ago.
Sorry I am not sure why you rate my first solution as Poor Service.

Was the answer not correct?
Customer: replied 2 years ago.

I apologize I'm use to it being good at the front is was correct. How do I ask another question

Expert:  Linda_us replied 2 years ago.
THIS ANSWER IS LOCKED!
You can view this answer by clicking here to Register or Login and paying \$3.
Linda_us, Finance, Accounts & Homework Tutor
Category: Homework
Satisfied Customers: 7290
Experience: Post Graduate Diploma in Management (MBA)
Linda_us and 7 other Homework Specialists are ready to help you
Customer: replied 2 years ago.

did you get the other question

Customer: replied 2 years ago.
Expert:  Linda_us replied 2 years ago.
Yes I got it and working on it.

Not sure if your reliseted for 1st Question or second one.
Expert:  Linda_us replied 2 years ago.

I would be offline now. If you have more questions for today you can create a new post so that other experts can help you.

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