At the end of a project, a firm's investment has a salvage value of $4 million. the firm will pay taxes of $.5 million on the sale of the equipment from the investment. what is the net cash flow to the firm?

Net cash flow to the firm = Expected salvage value at the end of project - Taxes paid on sale of equipment by the firm

= $ 4 Million - $ 0.5 Million

= $ 3.5 Million

Explanation:

Refer to the answer.

Please note that in order to find the net profit and loss at the time of equipment sale accumulated depreciation needs to be calculated till the time of sale. We can find the net book value of the asset at the time of sale by deducting the depreciation from the equipment balances in each year till the time of equipment sale. The net book value is then compared with the expected salvage value to find the net profit/loss in the sale transaction.

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation: