Salvage Value.
Your firm purchased machinery for $10 million. The machinery falls into an asset class that has a CCA rate of 25 percent. The project will end after five years.
If the equipment can be sold for $4 million at the completion of the project and your firm's tax rate is 35 percent, what is the after-tax cash flow from the sale of the machinery?
Assume that the firm has no other assets in the class, and that the asset class will be terminated upon the sale of the machinery.