You have 0 free answers left
Access 3.4 million answers at $2/month

Problem 11-3
Net Salvage Value

Allen Air Lines must liquidate some equipment that is being replaced. The equipment originally cost $19 million, of which 85% has been depreciated. The used equipment can be sold today for $6.65 million, and its tax rate is 35%. What is the equipment's after-tax net salvage value? Write out your answer completely. For example, 2 million should be entered as 2,000,000.

$


Asked on 20 Jun 2019

Answer

OC2736562
Answered on 20 Jun 2019

Salvage value is the value that the company receives from the sale of an asset at the end of the useful life of the asset.

Computation of equipment's after-tax net salvage value:

Details Amount $
Salvage Value (Sale value) 6,650,000
Less: Book value = 19M -85% depreciated = 2.85M -2,850,000
Net Salvage Value 3,800,000
Less: Tax rate 35% 1,330,000
After tax salvage value 2,470,000

Therefore, equipment's after-tax net salvage value = $ 2,470,000

Share

Related Questions

What best describes the time value of money?
a. The interest rate charged on a loan.
b. Accounts receivable that are determined uncollectible.
c. An investment in a checking account.
d. The relationship between time and money.
Answered
11 Mar 2020

Maintenance Margin

You are bearish on XYZ stock and decide to short 100 shares at the current market price of $50 per share.

How much in cash or securities must you have in your brokerage account if the broker

Answered
29 Sep 2019

Suppose you sell short 75 shares of a stock initially selling for $95. Your margin requirement is 100%.

What is the value of the 75 shares of stock (this is the amount you will borrow a Time 0)?

If the stock price drops to $80 per share, what is the new value of the 75 shares of stock (this is the amount you will pay back at Time 1)?

What is the total $ amount that you made (or lost) on the trade?

What is your return?

Answered
30 Sep 2019
© Notesolution Inc. - OneClass 2020TermsPrivacyAcademic Integrity