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Simora [160]
3 years ago
9

Dixie Chicken is about to close one of its fast food franchises. As part of the closing, the firm will sell a refrigeration unit

and its cooking units. The book value of the refrigeration unit is currently $18,203.00, while the book value of the cooking unit is $3,713.00. A buyer has offered $12,454.00 for the refrigerator and $6,116.00 for the cooking unit. The tax rate facing the firm is 35.00%. What is the cash flow from selling these assets
Business
1 answer:
sp2606 [1]3 years ago
4 0

Answer:

$19741.10

Explanation:

Cash flow from the sale = salvage value - tax(salvage value - book value)

Salvage value is the price at which the asset is sold

The refrigerator : $12,454.00 -0.35($12,454.00 - $18,203.00) = $14,466.15

$6,116.00 - 0.35($6,116.00 -  $3,713.00) = $5274.95

Total cash flow = $5274.95 + $14,466.15 = $19741.10

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