Healthy Potions, Inc., a pharmaceutical company, bought a machine at a cost of $2 million five years ago that produces pain-reliever medicine. The machine has been depreciated over the past five years, and the current book value is $800,000. The company decides to sell the machine now at its market price of $1 million. The marginal tax rate is 30%. What are the relevant cash flows? How do they change if the market price of the machine is $600,000 instead?
What are the relevant cash flows?
Original Cost of the Machine:
Current Book Value:
Years Machine Has Been In Service:
Current Market Price of the Machine:
Marginal Tax Rate:
Terminal-Year FCF:
How do they change if the market price of the machine is $600,000 instead?
Original Cost of the Machine:
Current Book Value:
Years Machine Has Been In Service:
Current Market Price of the Machine:
Marginal Tax Rate:
Terminal-Year FCF:
