Kasper Film Co

Multiple Choice

Kasper Film Co.is selling off some old equipment it no longer needs because its associated project has come to an end.The equipment originally cost $22,500, of which 75% has been depreciated.The firm can sell the used equipment today for $6,000, and its tax rate is 25%.What is the equipment's after-tax salvage value for use in a capital budgeting analysis? Note that if the equipment's final market value is less than its book value, the firm will receive a tax credit as a result of the sale.

A) $5,611
B) $5,906
C) $6,202
D) $6,512
E) $6,837