The Jones Company has just completed the third year of a 5-year diminishing value recovery period for a piece of equipment it originally purchased for $300000.The depreciation rate is 40%. 

• a. What is the book value of the equipment?
• b. If Jones sells the equipment today for $76000 and its tax rate is 30%, what is the after-tax cash flow from selling it? 
• c. Just before it is about to sell the equipment, Jones receives a new order. It can take the new order if it keeps the old equipment. Is there a cost to taking the order and if so, what is it? Explain. (Assume the new order will consume the remainder of the machine's useful life.)
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Answer rating: 100% (QA)

a To calculate the book value of the equipment we need to determine the accumulated depreciation aft... View the full answer