Problem:
Rocky Top, Inc. purchased some welding equipment six years ago at a cost of $579,000. Today, the company is selling this equipment for $110,000. The tax rate is 35 percent.
Required:
Question: What is the aftertax cash flow from this sale? The MACRS allowance percentages are as follows, commencing with year 1: 14.29, 24.49, 17.49, 12.49, 8.93, 8.92, 8.93, and 4.46 percent.
Note: Please provide reasons to support your answer.