The Jones Company has just completed the third year of afive-year MACRS recovery period for a piece of equipment it originally purchased for $304,000.

a. What is the book value of theequipment?

b. If Jones sells the equipment today for $184,000 and its tax rate is 35%, what is theafter-tax cash flow from sellingit?

c. Just before it is about to sell theequipment, 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 ifso, what isit? Explain.(Assume the new order will consume the remainder of themachine's usefullife.)

Note: Assume that the equipment is put into use in year 1.