Answer:
$748,820
Explanation:
The computation of the incremental cash flow is shown below:
As we know that
Incremental cash flow = Sale price - (sale price - book value) × tax rate
where,
Sale price is $791,000
The book value is
= Purchase value - accumulated depreciation
= $1,190,000 - $1,190,000 ÷ 7 years × 3 years
= $1,190,000 - $510,000
= $680,000
So, the incremental cash flow is
= $791,000 - ($791,000 - $680,000) × 38%
= $791,000 - $42,180
= $748,820
We simply applied the above formula
