Crosson Corporation recently sold a used machine for $40,000 . The machine had a book value of $60,000 at the time of the sale. What is the after-tax cash flow from the sale, assuming the company's marginal tax rate is 20 percent?
a. $40,000
b. $60,000
c. $44,000
d. $32,000
C
Loss of $20,000 generates a tax savings of $4,000 ($20,000 * 20%)
Proceeds + Tax Savings = After-tax cash flow
$40,000 + $4,000 = $44,000
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