Assume $21\%$ ordinary and capital gains tax rates.

a$.$ What is the book value of the machine?

b$.$ Calculate the firm's tax liability if it sold the machine for each of the following amounts: $$100,800$;$$58,800$;$$40,320$; and $$200.$

Data table

$($Click on the icon here $$ in order to copy the contents of the data table below into a spreadsheet.$)$

Rounded Depreciation Percentages by Recovery Year Using MACRS for

First Four Property Classes

$*$These percentages have been rounded to the nearest whole percent to simplify calculations while

retaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual

unrounded percentages or directly apply double$-$declining balance $(200\%)$ depreciation using the half$-$year

convention.