Answer:
The after tax cash flow will be $112,000.
Explanation:
The market value of the fixed asset is given at $112,000.
The book value of the same asset is $112,000.
The marginal tax rate is 39%.
The after tax cash flow will be
= [tex]Book\ value\ +\ (Market\ value\ -\ book\ value)\ \times\ (1\ -\ t)[/tex]
= [tex]\$ 112,000\ +\ (\$ 112,000\ -\ \$ 112,000 )\ \times\ (1\ -\ 0.39)[/tex]
= [tex]\$ 112,000\ +\ (0\ \times\ 0.61)[/tex]
= $112,000
