IO-IB. (Capital gains tax) The R. T. Kleinman Corporation is considering selling one of its old assembly machines. The machine, purchased for $40,000 five years ago, had an expected life of 10 years and an expected salvage value of zero. Assume Kleinman uses simplified straight-line depreciation, creating depreciation of $4,000 per year, and could sell this old machine for

$45,000. Also assume a 34 percent marginal tax rate.

a. What would be the taxes associated with this sale?

b. Ifthe old machine were sold for $40,000, what would be the taxes associated with this sale?

c. Ifthe old machine were sold for $20,000, what would be the raxes associated with this sale?

d. If the old machine were sold for $17,000, what would be the taxes associated with this sale?