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  1. business
  2. accounting
  3. assume that the combined federal and state income

Assume that the combined federal and state income tax rate for Adelaide Company is 35%....

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Accounting

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Assume that the combined federal and state income tax rate for Adelaide Company is 35%. Requirements 1. The book value of an old machine is $75,000. Adelaide sold the machine for $50,000 cash. What is the effect of this decision on after-tax cash flows? 2. The book value of an old machine is $75,000. Adelaide sold the machine for $95,000 cash. What is the effect of this decision on after-tax cash flows? Requirement 1 and 2. What is the effect of each decision on the company's after-tax cash flows? Begin by selecting the labels needed to calculate the after-tax cash flows for requirement 1 and 2, and then enter the amounts to determine the after-tax effect on cash for each requirement. (Use parentheses or a minus sign for a loss on sale and tax payment on gain.) Requirement 1 Requirement 2 Sales proceeds of Sales proceeds of $50,000 $95,000 Cash proceeds of sale $ 50,000 75,000 Book value of asset sold 75,000 95,000 Pre-tax gain (loss) on sale (25,000) 20,000 Tax savings / tax paid 8,750 7,000 Net cash inflow from sale 58,750 102,000 69

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