Builtrite purchased its current machine 3 years ago at a cost of $30,000 with an additional $5,000 in shipping and installationcosts and $3,000 in training unique to this new machine. The machine is being depreciated down to zero during its five-yearlife. Today, Builtrite is thinking of selling this machine for $20,000. If Builtrite is in the 34% tax bracket, what are the taximplications for the sale?O $340 tax owedO $340 tax benefitO $2040 tax owedO 52040 tax benefit

When a machine is sold, there will be a capital gain/loss. The tax is calculated as per the capital…

Answered: Buitrite purchased its current machine…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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The Target Copy Company is contemplating the replacement of its old printing machine with a new model costing $80,000. The old machine, which originally cost $40,000, has 6 years of expected life remaining and a current book value of $25,000 versus a current market value of $17,000. Target's corporate tax rate is 40 percent. If Target sells the old machine at market value, what is the initial after-tax cash outlay for the new printing machine? Round it a whole dollar and do not include the $ sign.
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Quick Computing installed its previous generation of computer chip manufacturing equipment 3 years ago. Some of that older equipment will become unnecessary when the company goes into production of its new product. The obsolete equipment, which originally cost $40 million, has been depreciated straight-line over an assumed tax life of 5 years, but it can be sold now for $18 million. The firm's tax rate is 30%. What is the after-tax cash flow from the sale of the equipment? Note: Enter your answer in millions rounded to 2 decimal places. After-tax cash flow million
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ff
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