An asset purchased for $100,000 with S = $20,000 after 5 years was depreciated using the 5-year MACRS rates. Expenses average $18,000 per year and the effective tax rate is 30%. The asset is actually sold after 5 years of service for $22,000. MACRS rates in years 5 and 6 are 11.52% and 5.76%, respectively. The after-tax cash flow from the sale is closest to:a. $27,760b. $17,130c. $26,870d. $20,585

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.