Question: Ten years ago, your company purchased a few corporate jets for $2,000,000. For tax purposes they will be fully depreciated over 20 years using the straight-line depreciation method. Assume a corporate tax rate of 30%. You plan to sell the jets in 5 years for $700,000.
a) What will be the book value of the jets in 5 years?
b) What will be the Tax on Gain from selling the jets?
c) What will be your after tax cash flow from selling the jets?
d) Suppose instead you sell the jets 9 years from now for $100,000. What would be the Gain on Sale?
e) Suppose instead you sell the jets10 years from now. What would be the accumulated depreciation?