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

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Question - Manzana Inc. is buying a piece of equipment. The equipment costs $2,000,000. The equipment is considered for tax purposes as a 5-year MACRS class. If the equipment is sold at the end of 5 years for $500,000, what is the after-tax cash flow from the sale of this asset (termination value of the equipment)? The marginal tax rate is 40 percent.

The annual expense percentage for a 5-year MACRS property from year 1 to 6 respectively are: 20.00%; 32.00%; 19.20%; 11.52%; 11.52: and 5.76%.

Reference no: EM132745863

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