Question

A firm has a machine it can sell for $40,000. The book value of the machine is currently $20,000. If the firm sells the machine, what are the net proceeds from the sale? Assume that the tax rate is 40%. Round to the nearest penny.

Answer 1

the net proceeds from the sale is $32,000

Step-by-step explanation:

The computation of the net proceeds from the sale is shown below:

Net Proceeds = Sale Price - Tax × (Sale price - purchase price)

= $40,000 - 40% × ($40,000 - $20,000)

= $40,000 - $8,000

= $32,000

Hence, the net proceeds from the sale is $32,000

We simply applied the above formula so that the correct value could come

And, the same is to be considered