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Calculate the tax amount in the fourth year

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Reference no: EM133185761

Question - The following information relating to an investment in equipment has been extracted from the books of Pro-CB Ltd:

Total purchase price $71,965; salvage value $3,985 at the end of year-4; net sales revenue (relating to the equipment): Year-1 $35,000; Year-2 $27,000, Year-3 $21,000 and Year-4 $15,000; applicable tax rate is 30%; and the required rate of return is 13%.

If the depreciation rate is 16% straight line, calculate the tax amount in the fourth year relating to the sale of the equipment only.

Reference no: EM133185761

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