Problem:
Consider an asset that costs $202,400 and is depreciated straight-line to zero over its 5-year tax life. The asset is to be used in a 2-year project; at the end of the project, the asset can be sold for $25,300.
Required:
Question: If the relevant tax rate is 32 percent, what is the aftertax cash flow from the sale of this asset?
Note: Provide support for your rationale.