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Healthy Potions, Inc., a pharmaceutical company, bought a machine that produces pain-reliever medicine at a cost of $2 million five years ago. The machine has been depreciated over the past five years, and the current book value is $820,000. The company decides to sell the machine now at its market price of $1 million. The marginal tax rate is 35 percent.

What are the relevant cash flows?

How do they change if the market price of the machine is $600,000 instead?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M938805

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