Two years ago Agro Inc., purchased an ACE generator that cost $300,000. Agro had to pay an additional $10,000 for delivery and installation, and the investment in the generator required the firm to increase its net working capital position by $20,000. The generator, which is being depreciated over a period of 4 years using straight-line depreciation, has a current market value of $71,150. The firm’s marginal tax rate is 40 percent. If the firm liquidates the asset for its current market value, compute the after-tax proceeds from the sale of the asset. Round your answer to the nearest dollar.

Two years ago Agro Inc., purchased an ACE generator that cost $300,000. Agro had to pay an additional $10,000 for delivery and installation, and the investment in the generator required the firm to increase its net working capital position by $20,000. The generator, which is being depreciated over a period of 4 years using straight-line depreciation, has a current market value of $71,150. The firm’s marginal tax rate is 40 percent. If the firm liquidates the asset for its current market value, compute the after-tax proceeds from the sale of the asset. Round your answer to the nearest dollar.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 11P

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