Answer:
$120,603.60
Explanation:
The computation is shown below:
But before that the following calculations to be done
Salvage Value = Cost of Asset × 18%
= $859,000 × 18%
= $154,620
Since the fixed asset depreciated to zero for the 5 years so the book value should also be zero
Now
Capital Gain = Salvage Value - Book value of Asset
= $154,620 - $0
= $154,620
Tax on Capital Gain = Capital Gain × Tax Rate
= $154,620 × 0.22
= $34,016.4
And finally,
After Tax Salvage Value = Salvage Value - Tax on Capital Gains
= $154,620 - $34,016.40
= $120,603.60
