What is the after tax cash flow from the sale of this asset

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Reference no: EM131993710

1. Consider a profitable company with an asset that cost $500,000 that is being depreciated straight-line to zero over its 10-year depreciable tax life. The asset is to be used in a 5-year project; and then be sold for $90,000. If the relevant tax rate is 35%, what is the after tax cash flow from the sale of this asset (after-tax salvage)?

2. Leggio Corporation issued 20-year, 7% annual coupon bonds at their par value of $1,000 one year ago. Today, the market interest rate on these bonds has dropped to 6%. What is the new price of the bonds, given that they now have 19 years to maturity?

Reference no: EM131993710

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