Doubts

Exercise Set - Topic 6

Exercise Set - Topic 6

by Sofia Lampreia Alves Garcia -
Number of replies: 1

Hi Professor,

I have a quick question about the salvage value calculation in the ECOGLASS project (Exercise Set - Topic 6 solutions excel)

In the exercise, the machines are sold for €60,000 at the end, and there’s a capital gain tax of €24,000. From what I understand, the tax should be subtracted from the sale price to get the net salvage value. But in the solution, it looks like the €60,000 and €24,000 are added, resulting in €84,000.

Shouldn’t the tax be subtracted instead of added?

Thanks!

Best,

Sofia


In reply to Sofia Lampreia Alves Garcia

Re: Exercise Set - Topic 6

by Julio Crego -
Dear Sofia,

In this case, the sale price is way below the value; hence, you save 24k in taxes (instead of paying them). Therefore, we sum 24.