(Solution) - Your firm purchased machinery with a 7 year MACRS life for -(2025 Original AI-Free Solution)

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Your firm purchased machinery with a 7-year MACRS life for $10 million. The project, however,
will end after 5 years. If the equipment can be sold for $4.5 million at the completion of the project,
and your firm's tax rate is 35%, what is the after-tax cash flow from the sale of the machinery?

Table 9.2
Tax depreciation allowed under MACRS
Year(s)
7 Year
1
0.1429
2
0.2449
3
0.1749

4
0.1249

5
0.0893
6
0.0892
7
0.0893
8
0.0446