Answer:
Option (d) is correct.
Explanation:
Net sales:
= Selling price - Selling cost
= $5,100,000 - (0.03 × $5,100,000)
= $5,100,000 - $153,000
= $4,947,000
Gain on sale:
= Net sales - (Cost - Depreciation)
= $4,947,000 - [$4,820,000 - (5 × $153,016)]
= $4,947,000 - ($4,820,000 - $765,080)
= $4,947,000 - $4,054,920
= $892,080
Tax on capital gain:
= Tax rate × Gain on sale
= 0.28 × $892,080
= $249,782.40
After-tax cash flow from sale of the property:
= Net sales - Tax on capital gain - Mortgage balance
= $4,947,000 - $249,782.40 - $3,600,000
= $1,097,218
The after-tax amount of cash from the sale of the property is $1,097,218. Therefore, option D is correct.
The after-tax cash flow is the final inflow of cash in the hands of the owner after considering all the costs and other expenses.
Computation:
Given,
Selling price of the property $5,100,000
Mortgage balance $3,600,000
Percentage on selling price 3%
Purchase price 5 years ago $4,820,000
Annual depreciation allowances $153,016
Tax rate 28%
The computation of the after-tax rate has been given in the image attached.
The after-tax amount of cash from the sale of the property is $1,097,218. Therefore, option D is correct.
To know more about after-tax cash flow, refer to the link:
https://brainly.com/question/16001091
