Company is purchasing some new research equipment

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Reference no: EM131354098

The Don'tMissSnow Company is purchasing some new research equipment today for $100,000. For depreciation purposes, it falls into the 3-year MACRS class. So depreciation rates are 33%, 45%, 15%, and 7%, respectively for years 1 through 4 of the asset's life. The company's tax rate is 40%.

a) If the asset is sold for $25,000 at the end of year 2, what will be the net cash flow on the sale?

b) If the asset is sold for $25,000 at the end of year 4, what will be the net cash flow on the sale?

Reference no: EM131354098

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