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Homework answers / question archive / Louwers Corporation recently sold a used machine for $50,000
Louwers Corporation recently sold a used machine for $50,000. The machine had a book value of $75,000 at the time of the sale. What is the after-tax cash flow from the sale, assuming the company's marginal tax rate is 25 percent?
Answer:
C . $ 56,250
Step-by-Step explanation
Loss = Book value - Sold price
= $75,000 - $50,000
= $25,000
Tax saving from loss = 25% of $25,000 loss
= $6,250
After-tax cash flow = Proceeds + Tax saving from loss
= $50,000 + $6,250
= $56,250
