1. Five years ago an organic farm bought a small tractor for $150,000. The equipment has reached the end of its useful life, and its purchased price has been fully depreciate. The firm is able to sell the equipment for $15,00. Given that the firm's marginal corporate tax rate is 34%, what is the terminal cash flow for this tractor?
A. 5,100
B. $32,000
C. $26,900
D.$9,900
2. A piece of equipment has depreciated to $3000, but it sells for $8,000 at an auction. Which of the following consequences is MOST accrate?
A. The firm must pay taxes on the selling price of $8,000
B. The firm can write-off the equipment as a charitable donation since the selling price is less than one-tenth of the original cost of the equipment.
C. The firm must pay taxes on the selling price less the remaining depreciation costs, $5,000
D. The firm can document the sale as a capital loss