Your firm purchased machinery for $10 million and received immediate 100% bonus depreciation. The project will end after 5 years. If the equipment can be sold for $4.5 million at the completion of the project, and your firm's tax rate is 21%, what is the after-tax cash flow from the sale of the machinery?
Added by John R.
Step 1
Calculate the tax savings from the bonus depreciation: $10 million x 100% = $10 million (bonus depreciation) Tax savings = $10 million x 21% = $2.1 million Show more…
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