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After tax cash flow from the sale of the equipmentSalvage Value. Quick Computing installed its previous
generation of computer chip manufacturing equipment 3 years ago. Some of the
older equipment will become unnecessary when the company goes into production
of it’s new product.The obsolete equipment, which originally cost million,
has been depreciated straight-line over an assumed tax life of 5 years, but it
can be sold now for $18 million.
The firm’s after tax rate is 35 percent. What is the after
tax cash flow from the sale of the equipment?