Flow salvage value salvage tax effects of capital

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Unformatted text preview: Value Salvage +/- Tax effects of capital gain/loss + Recapture of Net Working Capital Recapture Terminal Cash Flow Terminal Step 1: Evaluate Cash Flows Step c) Terminal Cash Flow: What is the cash c) Terminal flow at the end of the project’s life? flow 50,000 Salvage Value 50,000 +/- Tax effects of capital gain/loss + Recapture of Net Working Capital Recapture Terminal Cash Flow Terminal Tax Effects of Sale of Asset: Tax Salvage value = $50,000 Salvage $50,000 Book Value = depreciable asset - total Book amount depreciated. amount Book Value = $147,000 - $147,000 = $0. $0. Capital Gain = SV - BV = 50,000 - 0 = $50,000 50,000 Tax payment = 50,000 x .34 = ($17,000) Tax ($17,000) Step 1: Evaluate Cash Flows Step c) Terminal Cash Flow: What is the cash c) Terminal flow at the end of the project’s life? flow 50,000 Salvage Value 50,000 (17,000) (17,000) Tax on Capital Gain + Recapture of NWC Recapture Terminal Cash Flow Terminal Step 1: Evaluate Cash Flows Step c) Terminal Cash Flow: What is the cash c) Terminal flow at the end of the project’s life? flow 50,000 Sal...
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