An asset used in a three-year project is classified as a seven-year MACRS asset by the Is The asset is purchased four 5700 and will have savage of 5375

Finance Dec 22, 2020

An asset used in a three-year project is classified as a seven-year MACRS asset by the Is The asset is purchased four 5700 and will have savage of 5375. The tax rate is 25% Find the cash flow from selling the onset of the end of the project. 0 $300 $370 341 5294 5350 $323

Expert Solution

1]Cost of the asset$ 700

Depreciation for three years under 7 Year MACRS = 700*(14.29%+24.49%+17.49%) =$ 394

Book value at EOY 3 =$ 306

3]Gain on sale = 375-306 =$ 69Tax on gain = 69*25% =$ 17

4]Cash flow from selling = 375-17 =$ 358

ANSWER: [E] $358

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